Synopsis: The synopsis delves into the recent performance of silver, highlighting its remarkable 16% increase over a mere two-month period. This surge prompts speculation about the potential for a robust rally in the metal.
The price of silver hovered around the INR69,000 range in the final week of February but has since surged to approximately INR81,000.
Over the past two months, silver has experienced a notable increase of over 16 percent, consistently maintaining its position above the INR80,000 per kg threshold in the spot market.
According to Vishnu Kant Upadhyay, Assistant Vice President - Research and Advisory at Master Capital Services, this recent surge in silver prices can be attributed to various factors, including geopolitical tensions, global economic uncertainty, expectations of a US Federal Reserve interest rate cut, and rising industrial demand.
Unlike gold, silver possesses a dual advantage as both a precious and industrial metal. Its prices benefit from growing industrial demand, alongside its accessibility and affordability, making it a preferred choice for various income groups, particularly in ornament form.
Rahul Kalantri, VP of commodities at Mehta Equities, noted the sharp rise in key industrial metals like copper, aluminium, zinc, and lead prices in April due to concerns over supply constraints, prompting speculators to turn their attention to silver.
Aamir Makda, a commodity and currency analyst at Choice Broking, highlighted the escalating geopolitical tensions in West Asia, leading investors to seek refuge in assets like silver, renowned for their safe-haven appeal.
The anticipation of a potential rate cut by the Federal Reserve has also bolstered silver prices, as lower interest rates reduce the opportunity cost of holding non-interest-bearing assets, according to Makda.
Silver's future trajectory hinges on upcoming US economic indicators, including US CPI, payroll figures, and manufacturing activity, as observed by Upadhyay.
Technical indicators suggest further upward movement in silver prices. Apurva Sheth, head of market perspectives and research at SAMCO Securities, pointed out a breakout in international silver prices from a tight consolidation range, signaling potential for further gains.
However, some experts caution that the recent bull rally in silver prices may have peaked, considering easing geopolitical tensions and diminishing expectations for a June interest rate cut by the Fed, according to Kalantri.
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