Silver prices drop marginally as gold struggles for direction

Silver prices eased on August 5 on a subdued trend in gold and worries about industrial demand slowdown. The precious metal had fallen 0.5 percent yesterday on the COMEX.

The white metal traded in the red after a gap-down start in the afternoon session, tracking a weaker global trend.

The semi-precious metal has been trading lower than 5, 20, 50 and 100 days’ moving averages but higher than the 200-day moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 45.55, which indicates a bearish movement in the price.

Silver witnessed choppy trade as gold struggles for direction amid Fed’s uncertainty while industrial metals are pressurised by China’s slowdown, said Kotak Securities. The brokerage however expects gold to hold above the pivotal $1,800/oz level and this may keep a floor to silver as well.

Silver holdings in iShares ETF were unchanged at 17,202.02 tonnes. The fund NAV is trading at a discount of 1.08 percent.

The US dollar index was mildly lower at 92.24, down 0.03 percent against the major cross in the afternoon session.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International silver prices are trading flat to marginally lower on Thursday afternoon trade in Asia. Technically, LBMA Silver holds a resistance of 21-Daily Moving Average at $25.65 and below which could see a downside move up to $25.10-$24.30 levels. Resistance is at $25.77-$26.00 levels.”

“Domestic silver prices are trading flat to marginally weaker on Thursday early afternoon trade. Technically, MCX Silver September holds a resistance at 68200-69000 levels. Support is at 67100-66700 levels”, Iyer noted.

The spot gold/silver ratio currently stands at 71.26 to 1 indicating that gold has outperformed silver.

MCX Bulldesk was down 12 points, or 0.08 percent, to 14,585 at 15:22. 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 67,607 and a low of Rs 67,250 per kg on the MCX. So far in the current series, the precious metal has touched a low of Rs 65,656 and a high of Rs 75,215.

Silver delivery for the September contract slides Rs 86, or 0.13 percent to Rs 67,515 per kg at 15:28 hours with a business turnover of 8,876 lots. The same for the December contract fell Rs 105, or 0.15 percent, to Rs 68,459 per kg with a turnover of 2,236 lots.

The value of September and December’s contracts traded so far is Rs 459.94 crore and Rs 43.88 crore, respectively.

Similarly, the Silver Mini contract for August slipped Rs 120, or 0.18 percent at Rs 67,680 on a business turnover of 17,633 lots.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX Silver is trading with marginal downside since morning. LBMA Silver spot has attempted to break below the psychological mark of $25 in the previous session but did not sustain below that level. The resistance would be at 15-SMA of hourly chart placed near Rs 67,958 and the key support holds near Rs 67,500.”

At 1005 (GMT), the precious metal was down 0.15 percent and was quoting at $25.42 an ounce in New York.

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