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Silver prices decline on lower industrial demand; further weakness likely

Technically, LBMA Silver is below the 21-Daily Moving Average near the $26.00 level which could pull prices to $25.00-$24.70 levels.

Mumbai / July 22, 2021 / 03:36 PM IST

Silver prices fell on July 22 tracking the weakness in gold amid concerns about industrial demand and signs of a slowdown in manufacturing activities. The precious metal had gained one percent yesterday on the COMEX.

The white metal extended decline to trade at day’s low after a flat to gap-down start in the afternoon session.

The semi-precious metal has been trading lower than 5, 20, 50, 100 and 200 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 37.60, which indicates bearishness in the price.

Silver may witness choppy trade as both gold and industrial metals struggle for direction while investors remain clueless.

Silver holdings in iShares ETF were unchanged at 17,321.89 tonnes. The fund NAV is trading at a premium of 0.65 percent.

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The US dollar index slightly fell to 92.73, down 0.02 percent against the major cross.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, "International silver prices were marginally lower on Thursday afternoon trade in Asia supported by a reflation trade with higher economic growth and rising inflation. Technically, LBMA Silver is below the 21-Daily Moving Average near the $26.00 level which could pull prices to $25.00-$24.70 levels. Resistance is at $25.40-$25.70 levels.”

“Domestic silver prices are trading lower on Thursday afternoon tracking a stronger Rupee. Technically, MCX Silver September is below Rs 68,000 and this could pull prices to Rs 66,800-66,000 levels. Resistance is at Rs 67,700-68,400 levels,” Iyer noted.

The spot gold/silver ratio currently stands at 71.59 to 1 indicating that silver has outperformed gold.

MCX Bulldesk decreased 45 points, or 0.31 percent, to 14,496 at 15:13. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

In the futures market, silver for September delivery touched an intraday high of Rs 67,149 and a low of Rs 66,661 per kg on the MCX. So far in the current series, the precious metal has touched a low of Rs 66,286 and a high of Rs 75,215.

Silver delivery for the September contract slides Rs 262, or 0.39 percent to Rs 66,875 per kg at 15:16 hours with a business turnover of 12,922 lots. The same for the December contract slumped Rs 304, or 0.44 percent, to Rs 68,059 per kg with a turnover of 871 lots.

The value of September and December’s contracts traded so far is Rs 654.53 crore and Rs 29.18 crore, respectively.

Similarly, the Silver Mini contract for August edged lower Rs 290, or 0.43 percent at Rs 67,089 on a business turnover of 21,910 lots.

The trend in US dollar, equity markets and bond yields may continue to affect gold and silver and the focus will be on economic data from major economies, central bank comments and development relating to virus situation, US-China tensions, China’s crackdown on commodities and US infrastructure plan discussions, said Kotak Securities.

At 0950 (GMT), the precious metal fell 0.42 percent and was quoting at $25.15 an ounce in New York.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Sinha

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