Strong uptick in silver prices catches attention of investors

Kolkata: The strong uptick in the price of Indian silver this month has caught the attention of investors. On Wednesday, the August silver mini contract on Multi Commodity Exchange (MCX) hit an eight-year high of Rs 62,250 per kg. The metal’s price has increased by nearly 24% in July so far.

“Investor interest in silver is increasing. Silver is catching up with gold. In March this year, silver price was hovering around Rs 36,000 - Rs 37,000 per kg. Now it has crossed Rs 60,000 per kg mark. We remain bullish on silver,” Chirag Sheth, principal consultant, India and South Asia, Metal Focus, told ET.

Jewellers, too, have reported growing interest among consumers for silver. Nitin Khandelwal, an Akola-based jeweler, said silver prices had shot up to Rs 75,000 per kg in 2011 during the Eurozone crisis. “The global pandemic, too, has created an economic uncertainty and investors feel there is still room for silver prices to move up. So they are buying silver,” he said.

According to consultancy firm Metals Focus, consumption of silver in industries such as solar panels and electronics is also likely to increase as the economy rebounds, while output from silver mines is projected to fall 7% this year as the novel coronavirus interrupts operations.

On Thursday, silver was trading at $22.79 per ounce in the international market, while its spot price in India was at Rs 60, 586 per kg.

The rise in price of gold and silver has led to a spike in MCX’s bullion turnover ahead of its April-June quarterly results. This has happened due to sharp rise in prices of silver and gold which has resulted in 76% increase in the turnover value of bullion futures contracts, data on the company's website showed.

On Wednesday, the turnover in silver futures contract was Rs 32,994.37 crore, almost double of the previous day’s Rs 18,246.47 crore and the highest since April 2013.

The spike in price of silver over the last three sessions has outshone gold, which hit a record high on Wednesday topping Rs 50,200 per 10 gm. The August gold mini-contract on MCX was trading at a record high of 50,251 rupees in early trade on Thursday.

According to the data available on the exchange's website, the average daily turnover in bullion contracts in the July 1-22 period was Rs 20,653 crore, up by over 76% from Rs 11,701 crore in the year-ago period. This comprises Rs 11,594 crore silver futures compared with Rs 3,633 crore a year ago, and Rs 9,058 crore in gold futures compared with Rs 8,068 crore in the same period last year.