Silver prices declined to Rs 70,074 per kg on February 23 as participants increased their short positions as seen by the open interest. The precious metal had risen 3 percent yesterday on the COMEX.
The white metal traded in the red after a gap-up open in the afternoon session, tracking weakness in gold and industrial metals along with the firm dollar.
The general improvement in the global economic outlook and US emphasis on infrastructure have boosted the industrial demand outlook for silver.
Silver holdings in iShares ETF fell by 213.8 tonnes to 19,029.49 tonnes, the lowest since January 29.
The US dollar index trades firm at 90.15 levels, up 0.17 percent in the afternoon trade.
MCX iCOMDEX Bullion Index dropped 31.73 points, or 0.21 percent, at 14,987.62 at 14:54. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Sriram Iyer, Senior Research Analyst at Reliance Securities, said: “International and domestic silver prices are trading marginally in red in the morning and early afternoon trade. Technically, LBMA Silver Spot remained above $28.00 indicating that a bullish momentum will continue up to $28.60-$29.40 levels, whereas support is at $27.70-$27.00 levels.”
“Technically, MCX Silver March is trading above Rs 70,000 levels and can trade on a positive note up to Rs 70,800-71,250 levels. Support is at Rs 69,600-68,900 levels,” he said.
In the futures market, silver for March delivery touched an intraday high of Rs 70,699 and a low of Rs 70,031 per kg on the MCX. So far in the current series, the precious metal has touched a low of Rs 54,386 and a high of Rs 79,980.
Silver delivery for March contract eased by Rs 358, or 0.51 percent to Rs 70,074 per kg at 14:56 hours with a business turnover of 11,781 lots. The same for the May contract was down by Rs 328, or 0.46 percent, to Rs 71,250 per kg with a turnover of 3,625 lots.
The value of March and May’s contracts traded so far is Rs 1,147.77 crore and Rs 337.27 crore, respectively.
The spot gold/silver ratio currently stands at 64.75 to 1, indicating that silver has outperformed gold. The ratio has dropped to the lowest since August 1, 2014.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited, said, “MCX Silver is trading at a crucial resistance level now and if we break Rs 71,000 this time, we will have a clear way of Rs 75,000-77,000. The massive spike that we recently had seen was due to retail short squeeze, which has failed miserably. Silver has downside support at Rs 69,400-68,600 levels whereas resistance is at Rs 70,700-71,400 levels.”
Silver has regained upward momentum on concurrent gains in gold and industrial metals. However, a sharp rise is unlikely unless investor buying also picks up, said Kotak Securities.
At 09:35 (GMT), the precious metal was up 0.59 percent quoting at $27.92 an ounce in New York.
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