India’s silver futures may tread higher this month tracking a bounce in base-metals complex and supported by a positive bias in gold, but weak demand for the industrial metal could limit the upside, analysts said.
“The trend looks convincingly strong at the current levels, but a close above the 20,600 (rupees) is a necessity to provide further upside momentum,” said Pradeep Unni, a senior research analyst with Dubai-based Richcomm Global Services.
“Beyond 20,600, silver might head towards 21,500 and thereafter to 23,494,” Unni added.
Silver has outperformed gold and benefitted from recent investment demand and analysts said gold’s near-term outlook still remains bullish.
In January, MCX silver futures MSVc1 outperformed gold MAUc1, posting an 8 percent rise, while gold futures gained only 6 percent.
The benchmark March silver contract MSVH9 was 0.17 percent lower at 20,230 rupees per kg at 3:35 p.m.
MCX February copper MCCG9 has gained 13.39 percent so far in the new year on Chinese buying, but concerns about demand amid a deepening global recession choked rallies.
The white metal is usually influenced by gold as investors see all precious metals as one class. But the metal also takes a cue from base metals, particularly copper, as it is partly an industrial metal used in photography and electronics.
“It is a clear uptrend in silver,” said Amrut Deshmukh, a senior technical analyst with Way 2 Wealth Securities in Mumbai, adding every dip should be used to create long positions.”
Silver charts have created a ’rounding bottom’, which is a bullish signal, Deshmukh added.
Buying is recommended at 20,100 rupees, with a stop loss of 19,850 rupees and a target of 21,500 rupees.
India’s domestic demand continues to be slack, with unsold stock lying with banks and government agencies, traders said.
“There is hardly any demand for silver,” said Mayank Khemka, managing director with Delhi-based Khemka International.
“Silver will have to fall below 18,000 rupees for demand to pick up,” added Khemka.
“There is still 200-300 tonnes of unsold silver,” said Suresh Hundia, president of the Bombay Bullion Association, signifying lack of demand.
(Editing by Prem Udayabhanu)
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