Silver prices plummeted to Rs 68,834 per kg on March 3 as participants increased their short positions as seen by the open interest. The precious metal had gained 0.8 percent on March 2 on the COMEX.
The white metal traded in the red after a flat to gap-down start in the afternoon session, tracking stronger dollar and weakness in gold and base metals.
Silver prices were weighed down by disappointing Chinese economic data and continuing ETF outflow which shows weaker investor interest.
The trend in the US dollar may continue to be a key price-determining factor for gold and silver and the focus will be on US and European economic data, central bank comments, the trend in bond yields and development relating to US stimulus and virus situation, said Kotak Securities.
The semi-precious metal has been trading higher than 5, 50, 100 and 200 days’ moving averages but lower than 20-day moving averages on the daily chart. The Relative Strength Index (RSI) is at 51.47 which indicates neutral action in prices.
Silver holdings in iShares ETF decreased by 117.4 tonnes to 18,834.13 tonnes, the lowest since January 29.
The US dollar index traded flat-to-positive at 90.86, up 0.10 percent in the afternoon trade against the major cross.
MCX Bulldesk dropped 119 points or 0.82 percent, at 14,447 at 15:11 hours IST. 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 prices are trading lower this Wednesday morning and early afternoon trade tracking the fall in gold prices. Technically, LBMA spot silver could trade in a range from $26.40-$27.00.”
“Domestic silver prices are trading lower this Wednesday morning and early afternoon trade tracking overseas prices. Technically, MCX silver May futures could trade in the range from Rs 67,400- Rs 70,000”, Iyer said.
In the futures market, silver for May delivery touched an intraday high of Rs 69,332 and a low of Rs 68,676 per kg on the MCX. So far in the current series, the precious metal has touched a low of Rs 59,826 and a high of Rs 75,501.
Silver delivery for the May contract fell Rs 381, or 0.55 percent to Rs 68,834 per kg at 15:14 hours with a business turnover of 12,497 lots. The same for the July contract slipped Rs 430, or 0.61 percent, to Rs 69,831 per kg with a turnover of 43 lots.
The value of May and July’s contracts traded so far is Rs 603.80 crore and Rs 4.82 crore, respectively.
Similarly, the Silver Mini contract for April edged lower by Rs 289, or 0.42 percent at Rs 68,925 on a business turnover of 12,953 lots.
The spot gold/silver ratio currently stands at 64.73 to 1 indicating that silver has outperformed gold.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX May Silver is trading near Rs 69,000 levels; yesterday it made the hammer candlestick pattern and it is a bullish sign. We are seeing the 50-day SMA also attracting a certain amount of buying. The precious metal has support at Rs 68,600 levels on the downside whereas resistance is at Rs 70,700-71,400 levels.
At 09:49 (GMT), the precious metal was slightly down 0.19 percent, quoting at $26.82 an ounce in New York.
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