Reuters
Silver prices were steady this week to settle at Rs 71,049 per kg on stronger rupee and sell-off in industrial metals in choppy trade. However, the white metal was supported by gains in Gold, dollar weakness and ETF inflows.
It ended the week with a mild loss of Rs 36 on the domestic bourse. Silver prices slipped in four out of the five trading sessions on the MCX.
The semi-precious metal has been trading higher than 20, 50, 100 and 200 days’ simple moving averages but lower than the 5-day moving average on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 54.11 which indicates sideways in prices.
Silver holdings in iShares ETF rose by 279.88 tonnes to 17,878.85 tonnes in the week. The fund NAV is trading at a discount of 1.04 percent.
The US dollar index modestly jumped 0.25 percent to end at 90.01 against the rival currencies. The dollar index ended with a loss of 0.35 percent through the week.
Sunand Subramaniam, Senior Research Associate, Choice Broking said, “We are estimating global silver prices to trade mixed as ETF investments have shown a slowdown in the global market due to rising COVID-19 cases in Asian countries including Japan. Correspondingly, silver prices also find support from lower levels as the industrial demand is expected to find further recoveries in the United States are expected to resume business activities.
Overall, investors with cautious note should remain sideways or buy on dips in MCX Silver futures for the month ahead, he added.
“Silver crossed the Rs 74,000 level but failed to sustain above it and gave back all of the gains to form a massive shooting star and came near psychological level of Rs 70,000. I think that Rs 70,600 level and the uptrend line both are worth paying attention to buying in the silver, this is the sign of support on a daily candlestick. Prices are well sustained above the 21 days SMA,” Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited.
The spot gold/silver ratio currently stands at 68.28 to 1 indicating that gold has outperformed silver.
Silver delivery for the July contract tumbled by Rs 1,204, or 1.67 percent to settle at Rs 71,100 per kg with a business turnover of 11,009 lots. The same for the September contract slides by Rs 1,164, or 1.59 percent, to Rs 72,200 per kg with a turnover of 397 lots.
The value of July and September’s contracts traded on Friday was Rs 5,287.03 crore and Rs 135.72 crore, respectively.
Similarly, the Silver Mini contract for June edged lower by Rs 1,193, or 1.65 percent at Rs 71,130 on a business turnover of 14,269 lots.
The white metal settled with a loss of 1.49 percent at $ 27.65 an ounce in New York.
Technicals
Sriram Iyer, Senior Research Analyst at Reliance Securities said, “LBMA Silver if trades above $ 26.20 level we could witness a continuation of its bullish momentum up to $ 28.70-$ 29.80 levels in the coming week.”
“On the domestic front, MCX Silver July if sustains above Rs 70,500 level can take prices up to Rs 72,500-73,700 levels while support is at Rs 70,500-69700 levels”, Iyer said.
Recommendation
Choice Broking
Choice Broking said, “MCX July Silver has been rising continuously in Bullish Channel with Higher Highs and Higher Lows formation. However, the price has shifted below the middle band of Bollinger formation and Stochastic RSI also suggested negative crossover, which indicates some correction in the counter till the level of lower Bollinger band and prior demand zone.”
Reliance Securities advises its clients to buy Silver July futures near Rs 71,000-71,050 with a stop loss at Rs 70,000 and a target at Rs 73,000.
Purohit said, “Traders should look forward to a Buy-on-dips opportunity for MCX Silver future. The ideal buying range likely to be between Rs 70,600-70,700, keeping a target of Rs 74,500 and maintain a stop loss at Rs 68,800.
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