BOJ Rate Hike Expected to Boost Yen, Impact USD/JPY and Nikkei 
China Keeps Loan Prime Rates Unchanged for 13th Straight Month as Policymakers Prioritize Credit Demand Recovery 
Kevin Warsh Faces Early Fed Test as Inflation Risks Challenge Rate-Cut Expectations 
Indonesia Central Bank to Draft New Regulations After Expanded Economic Growth Mandate 
BOJ Signals More Rate Hikes as Inflation Risks Rise Amid Energy Price Pressures 
Goldman Sachs Sees Fed Holding Interest Rates Steady Until 2027 
Taiwan Central Bank Likely to Keep Interest Rates Unchanged Through 2027 
South Korea Signals Possible Interest Rate Hike as Inflation Remains Elevated 
South Korea Central Bank Holds Interest Rates Steady Amid Inflation Concerns 
ECB Keeps July Rate Options Open Amid Iran War Energy Price Risks 
Just last week, as it seemed like the month-long precious metals rally was potentially topping out, both metals received another boost courtesy of President Trump whose remarks that the US dollar was “getting too strong” sent the US dollar tumbling and US yields further retreating.
To make a long story short, a brew of a weakening US dollar and softening US yields spiked with investor anxiety over the last week approached nearly an ideal sweet spot for gold and silver bulls.
So where do we go from here? Overall, the baseline view does not contain a strong directional dollar view and we expect that a modest move lower in yields from here should be contained to the next couple weeks. We continue to see higher yields in the offing as the fundamental backdrop remains supportive.
These macro outlooks imply that while gold and silver prices could continue to be supported in the coming weeks they will likely adjust lower into the second half of this quarter ahead of a potential rate hike in June.
Turning to silver more specifically, money managers have added more than 35,000 contracts of net length in COMEX silver over the past three weeks, propelling their net long position to a record long level.
Unlike the recent boost in investor length on the COMEX, total ETF holdings of silver have remained lackluster and range bound
In terms of physical demand, higher prices likely led to lower sales of American Eagle silver coins which dropped by 47% yoy in 1Q17, according to the US Mint.
The Reserve Bank of India (RBI) reported relatively subdued 1Q17 imports of silver which, by our rough conversion, registered around a 15% yoy decline in 1Q17.
While questions still remain about how much additional physical demand will come from industrial sources this year, particularly photovoltaic installations after huge growth in 2016, we maintain our view that macro precious metals drivers like rates and FX will ultimately guide the price of silver in 2017.
