Silver riding on a lot of positives, eyes Rs 42,500

By Manoj Kumar Jain

Silver outperformed gold last week in global markets and gained around 1.87 per cent, settling at $ 16.82 per troy ounce.

At MCX, silver July futures contract settled at Rs 40,412 above its resistance level of Rs 40,250 per kg.

After the recent G7 meeting, the dollar index is showing weakness again and there are chances of a renewed trade war between the US and the rest of the world.

Market is also digesting two important events of this week. First, the meeting between US President Donald Trump and North Korean President Kim Jong Un. Second, the Fed policy call as the market is expecting a rate hike from the central bank.

Both events will give further direction to the global markets.

Supply concern in the global market and lower LME inventory supported base metal prices last week, which were also positive for silver prices. Global manufacturing activities that advanced mainly in China and the US are also supporting the price chart.

Looking at the global developments and positive fundamentals, we expect silver prices to continue to trade in an upward direction in the international market, which could test $ 17.40-17.80-18.20 soon. In domestic markets, we expect prices to test Rs 41,200-41,800-42,500 levels.


Technical view: Silver is able to sustain and close above its resistance level of $ 16.60 per troy ounce in the international market.

Silver contract will show weakness only when it closes and sustains below $ 16.30 per troy ounce, but such chances are remote. In the Indian context, the cutoff is Rs 39,800 per kilogram. Traders can buy silver futures contract around Rs 40,300 with strict stop loss below Rs 39,500 on closing basis for upside target of Rs 41,200-41,800-42,500.

Recommendations: Buy Silver at Rs 40,300 SL Rs 39,500(closing basis) Targets Rs 41200-41,800-42,500.

(Manoj Kumar Jain is Director of Commodity and Currency at IndiaNivesh Commodities. He has 20 years of experience in financial service sector. Readers are advised to consult their financial advisers before taking any position based on these observations.)