Silver had a sparkling run. What comes next may not be pretty
MUMBAI : With silver trading at higher than ₹90,000 a kg on commodity bourse MCX, market stakeholders warn that any increase toward the psychological ₹1 lakh level could result in a profit-booking spree. The white metal has risen 26% from ₹73,501 a kg to a record ₹92,475 in the year-to-date, MCX’s spot price index shows.
“At ( ₹) 90,000, silver is adequately priced, and any further rise could create an imbalance in pricing," said Shekhar Bhandari, president-global transaction banking, Kotak Mahindra Bank. “There is a good chance of a 5-10% pullback, given the recent spike we have seen, before the prices stabilise and a fresh global rally gets under way." Agreed Amit Modak, CEO of Pune-based jeweller PN Gadgil & Sons, who said that demand for silver articles had slumped over the past few months because of the steep jump in prices and that a 5-10% correction was imminent.
“When prices rise sharply and suddenly, buyers tend to defer purchases on the ground that they would correct," said Modak. “A 5-10% correction would see some buying emerge." Silver's rally has been fuelled by a parallel rise in gold and copper prices to record highs due to central bank actions and Chinese demand, respectively.
While global central bank buying catapulted international spot gold to a record high of $2,450.07 per ounce ( ₹74,222 per 10 gm approximately) on Monday, China’s announcement of a rescue package for its property sector pushed copper to a record high of $11,104.5 ( ₹9,36,000) a tonne on LME. Meanwhile, the international spot price of silver hit a 13-year high of $32.51 an ounce on Monday.
The lifetime high for the metal stands at $49.8 an ounce on 25 April 2011, according to Bloomberg. Silver’s recent global rally along with that of
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