Silver futures rise 0.75% to Rs 67,490 a kg on strong demand, dollar weakness

Silver

Silver prices climbed to Rs 67,490 a kg on January 21 as participants increased their long positions as seen by the open interest. The precious metal had gained 1.8 percent the previous day on the COMEX.

The white metal traded in the green after a gap up opening, tracking gains in gold, improving industrial demand outlook and weakness in the US dollar. The dollar index was trading lower at 90.21 levels, down 0.27 percent in the afternoon trade.

Silver holdings in iShares ETF rose by 21.7 tonnes to 17,862. 7 tonnes, the highest since November 9.

At 1522hours, MCX iCOMDEX Bullion Index, which tracks the real-time performance of MCX gold and silver futures, was up 28.46 points, or up 0.19 percent, at 15,158.87.

Sunand Subramaniam, Senior Research Associate at Choice Broking, said, “For the coming month, we are estimating MCX silver prices to trade mixed, as ETF investments have shown a slowdown in the global markets due to rise in the US dollar index. However, silver prices also find support as the industrial demand is expected to find further recoveries and global markets are expected to resume business activities.”

“The Indian government is taking initiatives to revive the economy with easing lockdown situation, by boosting industrial activities in construction and infrastructure developments. However, ongoing worries about the COVID-19 situation in some of the developed nations like the US, the UK, Germany and the European Union could also cap upside movement in global silver prices”, Subramaniam noted.

Sriram Iyer, Senior Research Analyst at Reliance Securities said international and domestic silver were trading with small gains on January 21 and early afternoon trade after global exchange-traded fund holdings hit an all-time high. According to Bloomberg data, ETF holdings jumped to 28,312.6 tons, the highest figure on record.

“Technically, LBMA Silver Spot is holding a resistance near 21-Daily Moving Average at $25.97 levels and below which could trade in the range of $24.90-$26.00 levels," Iyer said.

In the futures market, silver for March delivery touched an intraday high of Rs 67,848 and a low of Rs 67,201 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 soared Rs 500, or 0.75 percent, to Rs 67,490 per kg at 1459 hours, with a business turnover of 12,370 lots. The same for the May contract gained Rs 660, or 0.97 percent, to Rs 68,500 per kg with a turnover of 1,409 lots.

The value of March and May contracts traded so far is Rs 1,021.94 crore and Rs 25.08 crore, respectively.

The spot gold/silver ratio currently stands at 72.23 to 1 indicating that silver has outperformed gold.

“Technically, MCX Silver March holds a resistance zone at Rs 67,400-67,700 levels where prices could retreat and can trade on Bearish note up to Rs 66,500-65,800 levels," said Iyer.

Silver may trade with a positive bias along with gold only if the dollar continues to remain under pressure.

At 0932 GMT, the precious metal was up 0.79 percent quoting at $25.97 an ounce in New York.

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