Silver hits 3-month low on global concerns
Mumbai-India (Nov 24) Silver prices hit a three-month low at the Zaveri Bazaar spot bullion market here on Saturday, primarily owing to renewed talks of the US Federal Reserves tapering its monthly purchases of securities. Though gold prices followed, the decline was arrested by festive sales in India.
On Saturday, silver prices fell 0.73 per cent to close at Rs 45,940 a kg, a level not seen since August 12. On Friday, silver was traded at $19.87 an oz (28.3g) at the benchmark London market, the lowest since August 7. In the last seven weeks, silver prices have seen a 6.18 per cent decline in London, translating into a 7.95 per cent fall in the local bullion markets, considering 0.64 per cent depreciation in the rupee (62.87 a dollar).
“The decline in silver prices is driven by expectations the Fed would taper its $85-billion monthly bond- and mortgage-backed securities purchases, in light of the strengthening economic activity---similar to factors influencing the gold market,” said a recent report by Thomson Reuters GFMS.
In the first 10 months this year, silver prices have averaged $24.51 an oz, a 20.7 per cent annual decline. GFMS forecast a full-year average price of $24.24 an oz. The trend is similar for gold, too. After hitting a four-and-a-half-month low of $1,243.08 an oz on Thursday and moving in a very narrow range, gold traded at $1,243.63 an oz in the London spot market on Friday. The last time gold prices fell to these levels was on July 8 ($1,237.07 an oz).
In rupee terms, silver prices are set to fall to Rs 42,000 a kg, a 42 per cent fall from the peak of Rs 73,000 a kg in 2011. Samson Pasam, senior technical analyst, Angel Broking, estimates gold prices to see strong support at $1,200 an oz (Rs 29,200/10g) for near-month delivery on the Multi Commodity Exchange.