Silver futures surge above Rs 70,000/kg; experts advise traders to be cautious

Silver

Silver prices rose to Rs 70,460 per kg on February 16 as participants increased their long positions as seen by the open interest. The precious metal had gained 1.46 percent yesterday on the MCX.

The white metal traded in the positive territory after a gap-up open in the afternoon session tracking weak dollar.

Silver has benefitted from the uptick in industrial metal demand and rally in platinum price to six-year high on tighter demand-supply balance.

Silver holdings in iShares ETF remained unchanged at 19,549.49 tonnes.

The US dollar index trades lower at 90.21 levels, down 0.27 percent in the afternoon trade.

MCX iCOMDEX Bullion Index was up 48.31 points, or up 0.32 percent, at 15,124.43 at 14:47. 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 marginally in the red in a choppy trading session this morning and early afternoon trade in Asia. Technically, LBMA Silver Spot above the $28.00 level will continue its bullish momentum up to $28.35-$28.90 levels. Support is at $27.20-$26.50 levels.”

“Domestic silver prices are trading with gains this morning and early afternoon trade. Technically, MCX Silver March has bounced back from Rs 69,000 level upside and could take prices up to Rs 70,800-71,880 levels while support is at Rs 69,700-68,000 levels,” Iyer noted.

In the futures market, silver for March delivery touched an intraday high of Rs 70,864 and a low of Rs 70,065 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 rose Rs 281, or 0.40 percent to Rs 70,410 per kg at 14:50 hours with a business turnover of 13,040 lots. The same for the May contract gained Rs 279, or 0.39 percent, to Rs 71,510 per kg with a turnover of 2,128 lots.

The value of March and May’s contracts traded so far is Rs 1,283.17 crore and Rs 32.22 crore, respectively.

The spot gold/silver ratio currently stands at 65.73 to 1 indicating that silver has outperformed gold.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited, said: “MCX Silver is trading above Rs 70,000 and outperforming the gold due to fresh industrial demand. However, traders need to be cautious on the higher levels as high volatility on this level is expected. Silver has downside support at Rs 69,400-68,500 levels whereas resistance is at Rs 70,700-71,400 levels.”

Gold is expected to be supported by US stimulus expectations and this may underpin silver price as well; however, a sharp
upmove is unlikely if ETF outflows continue, said Kotak Securities.

At 09:25 (GMT), the precious metal was up 1.62 percent quoting at $27.77 an ounce in New York.

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