Silver futures tumble to Rs 68,743/kg on firm dollar; outlook remains bullish

Silver prices slumped to Rs 68,743 per kg on February 17 as participants increased their short positions. The precious metal had slipped 1.25 percent yesterday on the NYMEX.

The white metal extended decline after a gap-up open in the afternoon session, tracking weakness in gold and firm dollar.

The benchmark 10-year US treasury yield inched higher to 1.3 percent, the highest since February 2020, which also weighed on the precious metal.

Silver holdings in iShares ETF rose by 2.88 tonnes to 19,552.37 tonnes.

The US dollar index trades higher at 90.73 levels, up 0.25 percent in the afternoon trade.

MCX iCOMDEX Bullion Index dropped 118.48 points, or down 0.79 percent, to touch 14,832.53 at 15:01. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

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

“Currently, the gold-silver ratio, which has come down to 65-66 levels, still indicates cheaper silver prices, which can support prices from the lower level. Overall, investors with cautious note should remain bullish on MCX Silver futures for the month ahead,” he noted.

In the futures market, silver for March delivery touched an intraday high of Rs 69,626 and a low of Rs 68,697 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 fell by Rs 629, or 0.91 percent to Rs 68,743 per kg at 15:07 hours with a business turnover of 12,513 lots. The same for the May contract edged lower by Rs 585, or 0.83 percent, to Rs 69,900 per kg with a turnover of 2,307 lots.

The value of March and May’s contracts traded so far is Rs 1,041.87 crore and Rs 52.20 crore, respectively.

The spot gold/silver ratio currently stands at 65.99 to 1 indicating that gold has outperformed silver.

Sriram Iyer, Senior Research Analyst at Reliance Securities, said: “International silver prices were more resilient compared to gold and are trading marginally higher this morning and early afternoon trade in Asia amid industrial demand for the metal. Technically, LBMA Silver Spot below $27.30 will continue downside to sideways momentum up to $26.80-$25.20 levels. Resistance is at $27.90-$28.29 levels.”

“Domestic silver prices are trading marginally lower this morning and early afternoon trade, tracking weak gold overseas prices. Technically, MCX Silver March is below Rs 70,000 levels indicating a sideways to marginal downside momentum up to Rs 68,700-67,900 levels while resistance is at Rs 69,550-70,700 levels,” said Iyer.

At 09:41 (GMT), the precious metal was down 1.02 percent quoting at $27.04 an ounce in New York.

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