Silver futures plunge 1.61% to Rs 66,459 per kg as US treasury yields and dollar rise

Silver prices slumped to Rs 66,459 per kg on March 12 as participants increased their short positions as seen by the open interest. The precious metal had gained 0.2 percent yesterday on the COMEX.

The white metal extended decline after a gap-down start in the afternoon session tracking weakness in gold and a stronger dollar.

The semi-precious metal has been trading higher than 100 and 200 days’ moving averages but lower than 50, 20 and 5 days’ moving averages on the daily chart. The Relative Strength Index (RSI) is at 45.09 which indicates weak momentum in prices.

The benchmark 10-year US T-bond yield surged above 1.6 percent, up 7 basis point putting pressure on across assets class.

Silver holdings in iShares ETF remained stood at 18,426.89 tonnes on continued investor outflow. The fund NAV is trading at a discount of 0.47 percent.

The US dollar index traded higher at 91.88, up 0.46 percent in the afternoon trade against the major cross.

MCX Bulldesk declined 171 points or 1.19 percent, at 14,139 at 16:20. 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 in the red this Friday morning and early afternoon trade in Asia weighed down by a stronger Dollar. Technically, LBMA Silver Spot could continue to trade in the range of $24.30-26.00 levels.”

“Technically, MCX Silver May could trade in a range of 65600-67500 levels.” “Iyer advised his clients to buy on dips near Rs 66,000 with a stop loss of Rs 65,400 and for a target of Rs 67,200.”

In the futures market, silver for May delivery touched an intraday high of Rs 67,259 and a low of Rs 66,170 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 slipped Rs 1,086, or 1.61 percent to Rs 66,459 per kg at 16:26 hours with a business turnover of 12,709 lots. The same for the July contract tanked Rs 1,033, or 1.51 percent, to Rs 67,542 per kg with a turnover of 113 lots.

The value of May and July’s contracts traded so far is Rs 1,311.28 crore and Rs 14.62 crore, respectively.

Similarly, the Silver Mini contract for April edged lower Rs 1,013, or 1.53 percent at Rs 66,560 on a business turnover of 17,053 lots.

The spot gold/silver ratio currently stands at 66.59 to 1 indicating that gold has outperformed silver.

The trend in US dollar and bond yields may continue to be a key price determining factor for gold and silver and the focus will be on the US and European economic data and development relating to coronavirus outbreak, said Kotak Securities.

At 1100 (GMT), the precious metal was down 2.26 percent quoting at $25.60 an ounce in New York.

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