Today silver has created another new record on the Multi Commodity Exchange. Silver prices increased by about 2%. Silver prices on MCX remained soft at the beginning of Tuesday’s session. It started trading at Rs 3,06,499 per kg, which was lower than the previous closing price of Rs 3,10,275. However, it soon recovered the losses and touched a new record high of Rs 3,17,100 per kg. On the international front, silver touched a record high of $ 94.740 an ounce on the Comex exchange on Tuesday.
Main reasons for silver becoming expensive
This increase in silver prices has happened due to increased demand for safe investments and weakening of the US dollar. This trend was seen when America intensified efforts to claim Greenland from its NATO ally Denmark, in response to which the European Union started considering retaliatory measures. According to Bloomberg report, this strategic action of America has shaken the financial markets. This has increased demand for safe haven assets such as silver and gold and revived interest in the ‘Sell America’ trade. Now the focus is on how Europe responds. The French President is attempting to activate the EU’s counter-force mechanism, while the German Chancellor has insisted on caution. According to Bloomberg, this market turmoil following the incident of the US detaining the Venezuelan leader has further fueled the already ongoing rally in precious metals. Additionally, the Trump administration’s new criticism of the Federal Reserve’s policies has also strengthened gold and silver by rekindling concerns about the independence of the central bank.
Possibility of further upside?
According to Ponmudi R, CEO, Enrich Money, silver prices are witnessing strong buying on dips, making it an outperformer in the precious metals group. He said that the bullish trend can continue if it remains above the level of Rs 2,95,000 per kg. A sustained break above Rs 3,05,000 levels could open up targets towards Rs 3,15,000 and above. On the downside, if the price breaks below Rs 2,90,000, it may test Rs 2,85,000 levels from where strong buying is likely to resume.
