Covid-19 crisis but what’s interesting is silver outperformed gold in the month of May by rising nearly 20 per cent and topping the Rs 50,000-mark per kilogram.
Fear of global slowdown due to long lockdown in most of the countries due to the pandemic is supporting the white metal. Rising US-China tensions, weakness in the dollar index, and downbeat global economic data are also helping the silver prices rally. Latest data shows that the global economy will take time to recover from the pandemic.
Downbeat US personal spending and rise in personal income is also signalling that US citizens are more focused on saving rather than spending. US goods trade balance is also at a negative $69.7 billion, supporting safe-haven buying in precious metals. Tensions between the US and China and fear of global recession could continue to support silver prices in the coming days.
Technical view
Silver prices closed above Rs 50,000 per kilogram after September 2013 on the monthly chart, which shows long-term breakout in the commodity. Even in international markets, silver is near to breakout point of $18.55 per troy ounce at comex division. International, as well as, domestic monthly price chart is clearly indicating breakout in the commodity.
At comex division, once silver starts sustaining above $18.55 per troy ounce, it could extend the gains towards $19.50-20.40 per troy ounce in coming weeks. Silver will show weakness only when it gives close below $17.70 per troy ounce.
At MCX, silver gave long-term breakout on daily, weekly and monthly chart, indicating further upside in coming days. If it sustains above Rs 50,220 per kilogram, then it will extend the gains towards Rs 51,100-53,000 in coming days. Weakness is expected in this precious metal only if it closes below Rs 48,500 per kilogram but the chances of that happening are remote.
Silver is likely to show further strength in the coming days and traders can buy on dips around Rs 49,500 per kilogram with a strict stop loss below Rs 48,440 per kilogram on a closing basis for the upside target of Rs 51,100-53,000 per kilogram.
(Disclaimer: View in the above report is the author’s personal view and need not guarantee any kind of profits. Investor shall consult with their financial advisor before investing in commodities. Investments in commodity market are subject to market risk.)