Silver yesterday settled up 0.4% at 41480 after data showed that U. S. producer prices rose more than expected in June, increasing bullion’s inflation-hedge appeal. Prices gains momentum on Wednesday after Fed Chief Bernanke said that “highly accommodative” monetary policy will be needed for the “foreseeable future,” citing low levels of inflation and the high unemployment rate. Bernanke indicated that the Fed will not raise interest rates even after the unemployment rate reaches the Fed’s target of 6.5%.The comments came after the minutes of the central bank’s June policy meeting showed that Fed policymakers remain divided over when to begin tapering its USD85 billion-a-month asset purchase program. Around half of Fed policymakers believe the bank should start to scale back bond purchases by the end of the year, while others believe the labor market still remains too weak. Bernanke said last month the central bank could begin tapering its USD85 billion-a-month asset purchase program by the end of 2013 and wind it down completely by the middle of 2014 if the economy picks up as the central bank expects. An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies. In the week ahead, investors will be looking ahead to U. S. data on retail sales, consumer inflation and housing sector activity to further gauge the strength of the U. S. economy. Technically market is under short covering as market has witnessed drop in open interest by -2.73% to settled at 11477 while prices up 164 rupee, now Silver is getting support at 41415 and below same could see a test of 41349 level, And resistance is now likely to be seen at 41523, a move above could see prices testing 41565.

Trading Ideas:

Silver trading range for the day is 41349-41565.

Silver prices supported after data showed that U. S. producer prices rose more than expected in June, increasing bullion’s inflation-hedge appeal.

Soft economic indicators released in the U. S. and Europe also contributed to decline by strengthening the dollar.

Premiums on Chinese gold and silver products stayed sharply higher than in the United States.