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Silver can cross Rs 1,00,000 on MCX.Buy Dips: Sharekhan’s Praveen Singh | Market News

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Silver: Highest level in 11 years


Silver prices surged after breaking through the psychologically crucial resistance level of $30 on May 17. Silver prices hit a cyclical high of $32.50 on May 20, building momentum to surge to an 11-year high. It tested this level again in May, but failed to break through on May 21. The lack of major data in the United States also helped fuel the silver rally.

Silver remains volatile, surging nearly 10% from its May 17 low of $29.68.

At the close of domestic exchanges, silver was trading 0.60% lower at Rs 94,700 (MCX July contract). The corresponding COMEX spot price was $31.88.

Geopolitics Watch:

The geopolitical context continues to support metals in many ways. Russia has launched nuclear exercises near its border with Ukraine, ostensibly to counter Western threats. War continues in the Middle East. U.S.-China trade tensions are also giving bulls a helping hand.

ETF Holdings and COMEX Inventories:

Total global silver ETF holdings increased for the second consecutive day on May 20th, reaching 694.212 million ounces as of May 20th. COMEX silver inventories increased for the second consecutive day on May 20, reaching 298.386 million ounces.

Summary of data and events

There were no major US macroeconomic indicators released for the first two days of this week.

Yield and dollar:

The US 10-year Treasury yield was down nearly 0.59% at 4.41% while the US Dollar Index was trading at 104.67, up slightly by 0.10%. The US 2-year Treasury yield was down nearly 0.50% at the close of trading on MCX.

Fedspeak: Mostly neutral

In the absence of any major macroeconomic announcements, traders focused primarily on Fed speakers seeking their views on the Fed’s monetary policy. Fed officials intend to give the central bank more time to rein in inflation pressures. But with inflation remaining high, this seemingly restrictive policy is being treated as largely dovish by traders.

Fed Vice Chairman for Supervision William Barr said the first quarter’s inflation rate was disappointing and called for higher interest rate policy over the longer term. The Fed’s Bostic said inflation is likely to fall this year, but cautioned that the Fed is open to all possibilities. Fed President Daley sees no evidence of a need to raise interest rates, but he is still not confident about inflation. The Fed’s Mr. Jefferson argued that policy interest rates are a restricted area. Cleveland Fed President Loretta Mester said central bank officials need to wait until there is more confidence in inflation before cutting rates.

India’s silver imports

India imported 3,730 tonnes of silver in the first quarter of 2024, more than it imported in all of 2023.

Future US data

US statistics to be released tomorrow will include existing home sales. UK CPI inflation data will also be closely watched. However, the biggest focus will likely be on the May FOMC minutes, which will be released on May 22nd.


China’s yuan-denominated silver futures, which began trading in 2012, have already hit an all-time high, having surged 6% on May 21. Adding to the allure of the platinum metal is the fact that inventories in Shanghai are running low.

India’s silver imports and strong performance in industrial metals are supporting the white metal. At the same time, it is worth noting that commodities, especially metals, have become very unstable. Therefore, proper risk management is necessary.

Overall, the metal is expected to touch $34.50-35.50 (Rs 105,000 on MCX) levels in the coming months. Support is seen at $31 (Rs 93,500) / $29.50 (Rs 89,000). Immediate resistance is at $32.50. Buying on the edge remains the preferred strategy.

Disclaimer: Praveen Singh is Vice President, Base Currencies and Commodities at Sharekhan, BNP Paribas. The views expressed are personal.

First published: May 22, 2024 | 8:59am IST

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