Silver follows gold down in India
While events in Cyprus have helped bolster gold this week, silver remains under selling pressure in India.
Posted: Wednesday , 20 Mar 2013
MUMBAI (Mineweb) -
Silver slumped to a six month low in India last week, while gold prices too have been sliding. A weak rupee has also lent support to falling precious metal prices.
Though gold firmed up on March 20 given firm global cues, silver has remained under selling pressure for the third straight session and dropped to fresh two week lows owing to heavy speculative unwinding.
The white metal has been facing pressure at major retail outlets. Purchases of silver bars and coins from two of the major bullion dealers at Mumbai's Zaveri Bazaar are reported to have dropped by half. The low sentiment is expected to continue.
A similar situation was witnessed in gold too. At the start of 2013, gold prices were firm at $577.74 (Rs 31,300) per 10 gram, but by mid February, it had fallen to $550 (Rs 29,800). By the first week of March, gold prices have come down to $533 (Rs 28,900) level. On Monday, March 18, gold was trading up slightly at $555 (Rs 30,100) per 10 grams in the early hours of the day, but slipped again at the end of market.
Silver too has been closely following the broad trend in gold. The white metal was trading between a range of $1,077 (Rs 58,400) per kilo and $1,125 (Rs 61,000) in January. On February 11, silver slid almost $14.76 (Rs 800 per) kilo in one day. On March 18, silver was quoted at $1,027 (Rs 55,650) per kilo from the $,1011 (Rs 54,800) level last week.
Bullion dealers said there was no demand for silver from the industrial sector and coin sales too had dropped, but analysts maintain that an upward swing in the price of the white metal coupled with a weak rupee could result in a rally next week.
"With the Cyprus Parliament rejecting the proposed EU bailout package in a move unheard of in history, there are many surprises in store for precious metal. The market did not anticipate this from the government, this is unheard of,'' said Manish Jalal, bullion and forex dealer.
He added that India's imports of the white metal could be hit given the low demand for silver. India is the largest importer as well as consumer of silver and average domestic consumption of the metal is around 3,000 tonne per annum.
According to a report by the Working Group on Mineral Exploration and Development, " Indian import of silver for 2012 has declined to a range of 3,500 tonne to 4,000 tonne owing to a weak rupee and a high import duty compared to 4,800 tonne imported last year (2011).''
In the bullion market, silver continued to fall after a brief overnight rebound on the back of frantic speculative sell off. The contract of silver for delivery in April 2013 on the Multi Commodity Exchange in Mumbai recorded 2.05% decline to trade at $1,044 (Rs 56,821) a kilo.
Silver prices also fell in the spot and futures markets given reduced demand from domestic consumers. In the benchmark Mumbai’s Zaveri Bazaar, spot silver was trading at a decline of Rs 1,000.
"The white metal may fall further in the coming days with silver set to go below $1,000 a kilo,'' said Lalit Jagawat, a bullion dealer in Mumbai. Other bullion merchants added that selling pressure had gathered momentum in the country with gold slumping to its lowest level since July in the overseas markets.
Following the jump in the gold price this week, however, investors have a wait and watch attitude for silver. Analysts caution Whether the jump in gold price would be enough to push prices sustainably higher for silver, and that it remains to be seen.