Silver declines Rs 6,000 in 4 weeks. Is it time to buy the precious metal?

New Delhi: The bullion market saw a swift recovery ahead of the festive season in India and the prices of precious metals rallied. However, the bullion has eased after the festive euphoria fizzled out.

The prices of spot silver have declined more than Rs 6,000 per kilogram after November 15, the month’s high. The white metal was available at Rs 66,883 per kg on November 16, but exchanged hands at Rs 60,843 per kg on Friday, December 3.

Bullion prices have been impacted globally because of better-than-expected jobless claims data, a stronger dollar and rising bond yields as a result of the testimonies last week of US Federal Reserve Chair Jerome Powell and US Secretary of the Treasury Janet Yellen.

However, analysts have mixed views on silver. Some of them were bullish on the metal but have asked investors to accumulate it to extend the declines. On the other hand, others said they anticipate the bullion to continue the bearish movements.

NS Ramaswamy, Head of Commodities, Ventura Securities, said one should buy silver at the current prices. “However, the range of upside opportunity is only up to Rs 62,500, which remains the immediate resistance.”

Silver has traded in a bearish trend over the course of the week, declining since the previous week. The price remained in a sideways zone. The gold-to-silver ratio inclined to its best level of this month at 77.37, which is negative for the price.

For the short term, silver is looking like a good sell. Higher yields continue to be a drag on silver prices, said Kshitij Purohit, Lead Commodity at CapitalVia Global Research.

Anuj Gupta, Vice President-Commodities, IIFL Securities, said silver was an industrial commodity and lower industrial demand due to the new Omicron variant has impacted economic activity. “Demand for crude oil is also expected to be lower as international tours and travels are banned by many countries,” he added.

Analysts said silver might continue to remain range-bound and continue to be near immediate support and resistance levels.

Silver prices are holding the support at Rs 60,000 levels and if prices manage to cross below this level on a closing basis, prices could head towards important support near 58,200 levels.

“On the MCX, Rs 59,500 is the key support level now and if the price closes below this level, we may expect Rs 56,000,” said Rajpurohit of CapitalVia. “On the upside, the key resistance is at 62,790 and above this we will see again 65,500 levels. Above 65,500 we will see fireworks around 70,000 again.”

Gupta of IIFL Securities said he expects silver to test Rs 70,000 to Rs 75,000 levels again by till march 2022. “For the investor, this is a good time to buy. It is also a part of safe haven investments, like gold,” he added.


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