Silver prices rose above Rs 60,000 a kg on September 27 on rupee weakness and short-covering of position by market players as seen by the open interest. The precious metal had ended flat last week on the MCX.
Silver pared earlier gains to trade in the positive in the afternoon session, tracking the firm global cues.
The white metal has been trading lower than the 5, 20, 50, 100 and 200-day simple moving averages and exponential moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) was at 37.76, indicating weakness in the price.
The prices tested 9-month lows last week on reduced safe-haven buying, disappointing manufacturing PMI data from the US and Europe and Federal Reserve indicating winding down asset tapering program and a rate hike in 2022.
China second-largest property developer Evergrande missed payment deadline on dollar bond interest, while its electric car unit warned that it faced an uncertain future unless it got a swift injection of cash.
“Optimism over global economic recovery, weak US dollar and stable equities continue to weigh down the short-term sentiment of safe assets like silver. Hopes, that the US Federal Bank may soon stop its bond buying program also influencing the broad outlook of the commodity. However, a possible industrial demand picks up especially from China may dent major downside in the metal”, said Hareesh V, Head of Commodity Research at Geojit Financial Services.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX December Silver contract has formed a Descending broadening wedge on an intraday chart and past few sessions remained within a channel with the bearish trend. The price has shown weakness below the psychological mark of 60k and tested the low of Rs 59,330-59,260 last week. Silver has major support around Rs 59,319-57,900 while major resistance is at Rs 60,880-61,642.”
Speculators cut their long position in COMEX Silver contracts by 13,178 contracts to 900.
Silver holdings in iShares ETF decreased by 37.44 tonnes to 16,967.08 tonnes. The fund NAV is trading at a discount of 1.30 percent.
The US dollar index was modestly up 0.10 percent at 93.42 against the major currencies in the afternoon session.
The spot gold-silver ratio was at 77.64 to 1, indicating that silver had outperformed gold.
MCX Bulldesk rose 18 points, or 0.13 percent, to 13,720 at 3.52 pm. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
On MCX, December silver delivery touched an intraday high of Rs 60,693 and a low of Rs 60,156 a kg. In the current series, the metal has touched a low of Rs 59,222 and a high of Rs 74,127.
Silver delivery for the December contract gained Rs 325, or 0.54 percent, to Rs 60,280 per kg at 3.53 pm with a business turnover of 12,404 lots. The same for March soared Rs 160, or 0.26 percent, to Rs 60,800 with a turnover of 753 lots.
The value of December and March’s contracts traded, so far, is Rs 686.83 crore and Rs 12.64 crore, respectively.
The Silver Mini contract for November jumped Rs 292, or 0.48 percent, to Rs 60,533 on a business turnover of 29,392 lots.
Hareesh V further added that “If the support of Rs 59,000 remains hold the downside, there are chances of recovery upticks. However, a major upside obstacle is seen at Rs 75,000. A close below Rs 59,000 further liquidation pressure is on the cards.”
At 1030 (GMT), silver was 0.26 percent higher and was quoting at $22.48 an ounce in New York.
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