Silver prices were steady at Rs 68,550 per kg on December 31 as participants increased their short positions as seen by the open interest. The precious metal had gained 1.4 percent yesterday on the COMEX.
The white metal price has been stuck in a narrow range above $26/oz amid lack of fresh triggers ahead of year-end.
Silver prices were supported by the weakness in the US dollar and improving demand outlook for the industrial sector amid a recovery in the manufacturing sector.
The US dollar index trades lower at 89.61 levels, down 0.04 percent in the afternoon trade.
“This year silver gave the highest return, rising almost 45 percent on MCX and in the physical market. This year we observed that silver was most lucrative for investors as gold has become expensive. After June 2020, silver started moving up and touched the lifetime high,” said Anuj Gupta- DVP- Commodities and Currencies Research, Angel Broking Ltd.
“Physical silver demand increased this year as people bought silver for investment, gifting and industrial usage. We have noticed that after sharp recovery in global industrial activity the demand for industrial metals increased,” Gupta added.
As well as its safe-haven appeal, silver stands to benefit from improving industrial demand as governments invest in infrastructure spending to stimulate economic growth. During the election campaign, US President-elect Joe Biden called for $2 trillion infrastructure investment over the next four years.
Silver holdings in iShares ETF were marginally down by 1.4 tonnes to 17,325.98 tonnes. The iShares Silver Trust (SLV) has enormous net assets of $13.22 billion and has gained 33.69 percent since the first trading day of the year.
MCX iCOMDEX Bullion Index was down 6.10 points, or up 0.04 percent, at 15,683.40 at 14:57. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Sriram Iyer, Senior Research Analyst at Reliance Securities, said, “LBMA Silver Spot has given a breakout above $26.00 levels including for positive momentum up to $27.20-$27.95 levels. Support is at $26.10-$25.80 levels.”
MCX Silver March is trading above Rs 68,000 levels where breakout above Rs 69,000 will continue. Support is seen at Rs 67,400-66,900 levels, said Iyer.
In the futures market, silver for March delivery touched an intraday high of Rs 68,743 and a low of Rs 68,350 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 slipped Rs 64, or 0.09 percent to Rs 68,550 per kg at 15:00 hours with a business turnover of 14,638 lots. The same for the May contract gained Rs 65, or 0.09 percent, to Rs 69,523 per kg with a turnover of 606 lots.
The value of March and May’s contracts traded so far is Rs 991.11 crore and Rs 3.54 crore, respectively.
The spot gold/silver ratio currently stands at 71.59 to 1 indicating that silver has outperformed gold. The ratio was at 98 at the start of the year.
“We are very optimistic about silver in the year 2021. We are targetting $35 to $40/oz levels in silver in the year 2021. In the domestic market, we are targeting Rs 75,000 to Rs 80,000 levels in silver, expecting that silver may shine more than gold in 2021. Industrial metals will give more momentum in 2021, and silver and copper are on top of the industrial metals list,” Gupta noted.
Silver is a key component in the solar industry, which is poised for big growth. Solar investments account for 18 percent of silver industrial demand and about 10 percent of overall demand for the metal.
At 09:36 (GMT), the precious metal was marginally higher, up 0.17 percent at $26.61 an ounce in New York.
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