Silver prices tumbled to trade near Rs 60,000 a kg on September 29 as the dollar surge to 11 months high, choppiness in gold and industrial metals. The precious metal had fallen 1 percent yesterday on the COMEX.
Silver extended decline to trade at day’s low in the afternoon trade after a gap-up start, tracking the weak 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 37.19, indicating bearishness in the price.
Silver along with gold is pressurised by strength in the US dollar amid expectations of the Fed’s monetary tightening. Also weighing on the prices are demand concerns due to slowdown in manufacturing activity and concerns about the health of Chinese economy.
Fed chief Jerome Powell cautioned that the causes of the recent jump in inflation may last longer than anticipated.
Silver may remain choppy as risk sentiment may affect gold and industrial metals differently however if gold manages to stabilize soon then we may see some buying interest emerging in silver as well, said Kotak Securities.
The key event today is a comment from Fed and other central bank officials which may give further direction to an ongoing debate about monetary tightening, it added.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “The price of silver has dropped as the value of the dollar has risen. As rates rose in response to improving house price data, the greenback was able to gain traction. Prices were also impacted by lower-than-expected consumer confidence.” “He said MCX Silver has support at Rs 59,600-58,700 levels, while resistance is seen at Rs 61,700.”
Silver holdings in iShares ETF remained unchanged at 16,843.23 tonnes. The fund NAV is trading at a premium of 1.14 percent.
The US dollar index was modestly up 0.06 percent at 93.83 against the major currencies in the afternoon session, the highest level since October 25, 2020.
The spot gold-silver ratio was at 78.10 to 1, indicating that gold had outperformed silver.
MCX Bulldesk increase 7 points, or 0.05 percent, to 13,712 at 3.43 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 60,629 and a low of Rs 59,905 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 dipped Rs 382, or 0.63 percent, to Rs 60,082 per kg at 3.45 pm with a business turnover of 12,440 lots. The same for March fell Rs 351, or 0.58 percent, to Rs 60,620 with a turnover of 791 lots.
The value of December and March’s contracts traded, so far, is Rs 777.99 crore and Rs 11.99 crore, respectively.
The Silver Mini contract for November slumped Rs 348, or 0.57 percent, to Rs 60,346 on a business turnover of 29,669 lots.
Sriram Iyer, Senior Research Analyst at Reliance Securities said, “Technically if LBMA Silver continues to trade below $22.50 level we could see the Bearish momentum continue up to $22.00-$21.75 levels. Resistance is at $22.80-$23.10 levels. Domestic silver prices are trading marginally in the red early Wednesday afternoon trade, tracking subdued overseas prices.”
“Technically, if MCX Silver December continues to trade below Rs 60,300 level we could see the Bearish momentum continue up to Rs 59,900-59,000 levels whereas resistance is at Rs 60,800-61,200 levels”, Iyer added.
At 1023 (GMT), silver was 0.59 percent down and was quoting at $22.33 an ounce in New York.
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