MUMBAI: Silver prices crashed in the international markets on Friday on speculative unwinding, and tracking the global trend the price of the metal also feel in the domestic market. During the day's trade in the Mumbai bullion market, silver prices closed at Rs 56,875 per kg, down Rs 6,530, or 10.3%, from its Thursday close. The crash in silver prices was even more severe in the international market where the price crashed nearly 14% to $32.61 to an ounce, from $37.82 the previous day. And in the futures market in India, on MCX, prices of different contracts on silver were down between 11% and 12% during closing hours.
With the US dollar gaining strength, there is a good chance that gold prices could also move the silver's way in India. Since the prices of both the precious metals are linked to the dollar, any strength of the US currency leads to a slide in the prices of these assets, and the same is happening now, market players pointed out.
Looking at the speculative selling trend, bullion market veterans now predict silver prices to fall to around Rs 50,000 over the next few days since a large number of speculators are now trapped with their positions in silver, bought at higher levels recently. "It should fall to the Rs 50,000 level in a few days. After silver prices shot up to Rs 75,000 level a few months ago and then came down sharply to stabilize around Rs 60,000, there was substantial buying. Now that the price has crashed much below that level, there should be more downside," said Lalit R Jagawat, director, Nakoda Bullion, one of the leading bullion traders in India. Prices of silver in the domestic market had shot up to Rs 75,020 on April 25 this year but then came down sharply and was hovering around the Rs 60,000 level for a few months.
The weakness in the prices of precious metals, and not only of silver, is also attributed to the strength of the dollar that is leading to a global sell-off in commodities. On Friday, gold prices in the international market fell 3% to hover around the $1,700 per ounce level. And tracking the international prices, in the Mumbai market the price of the yellow metal fell 2% to Rs 27,475 per 10 grams. From its all time high of Rs 29,000 earlier this month, the prices of gold, one of the most preferred safe haven investments, is now down 5.3%. With substantial speculative interest still remaining in the yellow metal, the price could go down further, local bullion trades said.
In the local market, the fall in the price of gold is much lower than that in the global market, mainly because the rupee is weakening because of the strength of the dollar.
On Friday, the rupee nearly touched the 50 level to a dollar, but closed at 49.43, stronger by 15 paise.
With the US dollar gaining strength, there is a good chance that gold prices could also move the silver's way in India. Since the prices of both the precious metals are linked to the dollar, any strength of the US currency leads to a slide in the prices of these assets, and the same is happening now, market players pointed out.
Looking at the speculative selling trend, bullion market veterans now predict silver prices to fall to around Rs 50,000 over the next few days since a large number of speculators are now trapped with their positions in silver, bought at higher levels recently. "It should fall to the Rs 50,000 level in a few days. After silver prices shot up to Rs 75,000 level a few months ago and then came down sharply to stabilize around Rs 60,000, there was substantial buying. Now that the price has crashed much below that level, there should be more downside," said Lalit R Jagawat, director, Nakoda Bullion, one of the leading bullion traders in India. Prices of silver in the domestic market had shot up to Rs 75,020 on April 25 this year but then came down sharply and was hovering around the Rs 60,000 level for a few months.
The weakness in the prices of precious metals, and not only of silver, is also attributed to the strength of the dollar that is leading to a global sell-off in commodities. On Friday, gold prices in the international market fell 3% to hover around the $1,700 per ounce level. And tracking the international prices, in the Mumbai market the price of the yellow metal fell 2% to Rs 27,475 per 10 grams. From its all time high of Rs 29,000 earlier this month, the prices of gold, one of the most preferred safe haven investments, is now down 5.3%. With substantial speculative interest still remaining in the yellow metal, the price could go down further, local bullion trades said.
In the local market, the fall in the price of gold is much lower than that in the global market, mainly because the rupee is weakening because of the strength of the dollar.
On Friday, the rupee nearly touched the 50 level to a dollar, but closed at 49.43, stronger by 15 paise.
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