Silver price up 16% in just 2 months; is the metal ready for a strong rally?

Silver prices were astir ₹69,000-odd levels successful the past week of February; they are trading adjacent the ₹81,000-odd levels now.

The caller emergence successful metallic prices could beryllium attributed to assorted factors, including geopolitical tensions, planetary economical uncertainty, rate-cut hopes and concern demand.

"The summation successful metallic prices tin beryllium attributed to planetary concerns, including geopolitical tensions specified arsenic the Israel-Iran struggle and the Russia-Ukraine war, expectations of a US Federal Reserve involvement complaint cut, and rising concern request amid increasing manufacturing enactment globally," Vishnu Kant Upadhyay, Assistant Vice President - Research and Advisory astatine Master Capital Services, observed.

Unlike gold, metallic offers a unsocial vantage arsenic an concern metal, with its prices buoyed by expanding concern demand. Furthermore, its accessibility and affordability marque it a preferred prime for lower-income groups, peculiarly successful the signifier of ornaments.

Rahul Kalantri, VP of commodities astatine Mehta Equities, pointed retired that cardinal concern metals similar copper, aluminium, zinc, and pb prices roseate sharply successful April owed to worries implicit proviso constraints. This has prompted speculators to stake mostly connected silver.

"Silver has the dual vantage arsenic it comes nether precious and concern metals; that’s wherefore a bullish rally successful golden besides positively influenced metallic prices," said Kalantri.

Aamir Makda, commodity and currency expert astatine Choice Broking, underscored that geopolitical tensions successful West Asia person escalated, starring investors to question refuge successful assets similar silver, known for their safe-haven appeal.

"The uncertainty and risks associated with the geopolitical scenery person heightened the attractiveness of metallic arsenic a reliable store of worth during turbulent times," said Makda.

Silver and golden prices person besides risen lately, based connected expectations of a complaint chopped by the US Fed. Lower involvement rates are affirmative for precious metals arsenic they trim the accidental outgo of holding non-interest-bearing assets.

"Market sentiments person been influenced by expectations of a imaginable complaint chopped by the Federal Reserve. The anticipation of a much accommodative monetary argumentation stance from the Fed has bolstered metallic prices further, arsenic little involvement rates typically trim the accidental outgo of holding non-interest-bearing assets similar precious metals," said Makda.

A beardown rally successful metallic prices ahead?

Several factors person made the outlook for metallic highly promising.

According to Upadhyay, the absorption of silver's adjacent determination depends connected respective upcoming US economical indicators, including US CPI, payroll figures and manufacturing activity.

"Silver is expected to outperform gold, driven by accrued concern flows, constrained excavation production, and robust concern demand. These factors are creating a marketplace deficit," said Upadhyay.

Technical indicators besides bespeak metallic prices whitethorn emergence further from the existent levels.

Apurva Sheth, the caput of marketplace perspectives and probe astatine SAMCO Securities, pointed retired that planetary metallic prices had been consolidating successful a choky scope of $20-25 per troy ounce (1 troy ounce is 31.1034768 gms) implicit the past year. Silver prices broke retired of this consolidation successful April and are trending higher.

"The 10, 20, 30 and 40-month moving averages had converged, signalling that a large determination is possible. We judge that the up-move successful metallic prices has conscionable begun, and it has the imaginable to trial its erstwhile highs of $ 49.83 per troy ounce. If planetary Silver prices trial these highs, past Silver prices successful the Indian markets could beryllium trading successful six digits per kg soon," said Shah.

"On the regular chart, metallic prices person continued to commercialized successful the rising transmission enactment and sustained implicit 38 per cent of the Fibonacci retracement level placed astatine ₹79,535, which volition beryllium a cardinal enactment level to look for. Here, an contiguous absorption level is astatine ₹81100, and if the terms breaks done this hurdle, we whitethorn expect further upside successful metallic towards ₹82,450 –84,000 successful upcoming sessions," said Makda.

However, immoderate experts hint that the bull rally successful metallic prices mightiness person peaked considering easing geopolitical tensions and fading expectations for an involvement complaint chopped by the Fed.

“Looking astatine the existent script of easing geopolitical tensions and diminishing prospects for a June involvement complaint chopped by the Fed, the metallic bull rally appears to person deed a impermanent roadblock. The terms of metallic whitethorn amusement up successful a inclination if immoderate of these scenarios alteration and prices transverse the $30 mark," said Kalantri.

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Disclaimer: The views and recommendations supra are those of idiosyncratic analysts, experts and broking companies, not Mint. We counsel investors to cheque with certified experts earlier making immoderate concern decisions.

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Published: 26 Apr 2024, 05:18 PM IST