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Retail frenzy pushes silver prices above Rs 70,000/kg, forces traders to cover short positions

In the futures market, silver for March delivery touched an intraday high of Rs 70,682 and a low of Rs 68,353 per kg on the MCX.

Mumbai / January 29, 2021 / 03:50 PM IST
Silver

Silver

Silver prices climbed to Rs 69,698 per kg on January 29 as participants increased their long positions as seen by the open interest. The precious metal had gained 2.1 percent on January 28 on the COMEX.

The white metal extended gains in the afternoon session after a gap up open, tracking firmness in gold prices and retail frenzy amongst retail traders caused by interest chatter on Twitter and Reddit.

The rumour spread on the social media platforms that banks have been manipulating silver prices, keeping them artificially low and masking a shortfall in physical supplies, Bloomberg reported.

According to CME data, trade volumes nearly doubled from January 28 to January 29 owing to the volatility caused by day traders.

The US Dollar Index traded higher at 90.71 level, up 0.28 percent, in the afternoon trade.

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Silver holdings in iShares ETF dropped by 135.8 at 17,651.77 tonnes.

Participants will focus today on the US and European economic data and developments relating to coronavirus outbreak and vaccine roll-out, US stimulus discussions and US-China tensions.

MCX iCOMDEX Bullion Index inched higher 192.80 points, or up 1.26 percent, at 15,486.35 at 15:16. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Sriram Iyer, Senior Research Analyst at Reliance Securities said: “International silver was trading weaker this Friday morning trade and early afternoon trade in Asia having gained on Thursday as traders covered short positions on rumours about a short squeeze driven by retail investors.”

Technically, LBMA Silver Spot has given a sharp rise above $26.00 levels indicating a positive breath up to $26.87-$28.17 levels. Support is at $26.00-$25.20 levels, he said.

In the futures market, silver for March delivery touched an intraday high of Rs 70,682 and a low of Rs 68,353 per kg on the MCX. So far in the current series, the precious metal has touched a low of Rs 54,386 and a high of Rs 79,980.

Silver delivery for March contract edged higher Rs 2,587, or 3.83 percent, to Rs 70,182 per kg at 15:33 hours with a business turnover of 14,229 lots. The same for the May contract rose Rs 2,580, or 3.76 percent, to Rs 71,142 per kg with a turnover of 1,403 lots.

The value of March and May’s contracts traded so far is Rs 3,079.92 crore and Rs 76.16 crore, respectively.

The spot gold/silver ratio currently stands at 68.80 to 1 indicating that silver has outperformed gold.

With a choppy trade in gold, silver may also witness mixed trade and one should wait for lower levels to create fresh long position, said Kotak Securities.

At 09:54 (GMT), the precious metal surged 4.16 percent quoting at $27 an ounce in New York.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Sinha
first published: Jan 29, 2021 03:49 pm

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