Madhvi Sally, ET Bureau Jan 17, 2013, 12.25PM IST
AHMEDABAD: Silver prices are expected to remain bullish in the coming months as industrial demand is firming up. Prices have risen by over 2.5-3 % in the past one week.
“Silver prices will firm up as industrial activity picks up owing to global cues and economic activity unleashed by the government,” said Prithviraj Kothari, managing director, Riddisiddhi Bullion. He added that demand of both silver and gold is currently low with a liquidity crisis in the market.
“We are bullish on silver rather than gold and expect it to touch Rs 62,000 a kg in the coming months,”
he said. The electronics sector is expected to be the mainstay of industrial demand over the next two years with Asia as a potential growth centre.
Around 66% of world’s silver production is used for industrial purpose. In the spot market, the price quoted by the Bombay Bullion Association on Tuesday was Rs 58,740 a kg compared to Rs 57,290 on January 4. Silver for March delivery on the MCX was 0.81% higher at Rs 59,218 per kg and for July delivery 0.73% higher at Rs 61,822.
On the London Metal Exchange, silver was up 0.9% at $31.29 an ounce. Silver prices ranged from Rs 57,000 to Rs 59,000 a kg since December. Similarly, spot prices have remained stable at $29.20-$ 31.49 an ounce since December. Traders and analysts attribute this volatility to negligible demand in the market.
On Tuesday, one kg of silver bar was quoted at Rs 67,950 at an MMTC retail outlet in Ahmedabad compared to Rs 66,890 on January 2. “Silver prices are not volatile but there is no clear direction why the prices are moving. The equity market is firming up and we see few investors have turned to global equity,” said Hareesh V, analyst at Geojit Comtrade. He added that volumes have been less.
“In 2012, average trading volume was 35-40 lakh kg per week on MCX. Since the beginning of January, weekly trading has been 30 lakh kg,” he said. Short-term investors were opting for other commodities like barley, guar gum and crude oil over metals, said traders. But there were long-term investors optimistic about the prices firming up in the coming months.
“Long-term investors are expecting silver prices to touch Rs 75,000 a kg and are entering market ,” said Anjani Sinha, CEO & MD, National Spot Exchange that markets e-silver products.