Silver prices edged higher to Rs 68,096 per kg on February 3 as participants widened their positions. The precious metal had a sharp fall of 10.3 percent yesterday on the COMEX.
The attempted short squeeze by small retail traders on silver has at least temporarily failed and one of the reasons contributing to the pullback could be the CME Group raising maintenance margin on silver futures by 17.9 percent on Monday to tackle unusual market volatility.
Silver holdings with iShares ETF rose by 3,416 tonnes in the last three trading sessions taking total holdings to record high levels of 21,067.85 tonnes.
The US Mint yesterday said it was unable to meet surging demand due partly to pandemic-driven demand and plant capacity issues.
The US dollar index traded firm at 91.24 levels, up 0.22 percent in the afternoon trade, the highest level in two months.
MCX iCOMDEX Bullion Index rose 38.88 points, or up 0.26 percent, at 15,080.06 at 16:06. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International silver prices rebounded this Wednesday morning and early afternoon in Asia after falling over 8% during the previous session. Technically, LBMA Silver Spot after giving a sharp correction is trading near $26.89 levels indicating a sideways momentum to continue in the range of $26.00-$27.80 levels.”
Domestic silver prices are trading flat to marginally higher this Wednesday morning and early afternoon in Asia, tracking overseas prices, he added.
In the futures market, silver for March delivery touched an intraday high of Rs 69,147 and a low of Rs 68,048 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 jumped Rs 555, or 0.82 percent to Rs 68,096 per kg at 16:13 hours with a business turnover of 12,800 lots. The same for the May contract surged Rs 426, or 0.62 percent, to Rs 69,045 per kg with a turnover of 1,171 lots.
The value of March and May’s contracts traded so far is Rs 1,634.16 crore and Rs 55.59 crore, respectively.
The spot gold/silver ratio currently stands at 68.82 to 1 indicating that gold has outperformed silver.
Technically, MCX Silver March holds support of 21-Daily Moving Average at Rs 67,300 levels and above which could see sideways to bullish momentum but still remain in the range of Rs 67,000-69,800 levels, said Iyer.
Kotak Securities said the trend in US dollar may continue to be key price determining factor for gold and focus will be on the US and European economic data and development relating to US stimulus, virus outbreak and vaccine progress. Silver’s recent movement is largely on the back of speculative buying however once price normalizes we may see it moving in sync with gold.
At 10:49 (GMT), the precious metal was up 1.13 percent quoting at $26.70 an ounce in New York.