Strong investment demand driven by heavy buying by the Exchange Traded Funds (ETFs) and a weaker rupee has triggered a sharp gain of nearly 20 per cent in silver prices over the past one month.
Silver prices crossed ₹50,000 a kg in futures on MCX.
Among the factors pushing up the precious metals are the ongoing China-US trade war causing global economic uncertainty as well as the weaker currency.
Prithviraj Kothari, National President of India Bullion and Jewellers Association (IBJA), told BusinessLine that investment buying, coupled with reduction in the interest rates in the US, has firmed up the prices of precious metals, including silver.
“We are seeing strong investment demand from silver ETFs. In the past couple of weeks we have seen the quantities of about 1500-1700 tonnes of silver being bought in these ETFs,” he said.
“If we look at the 10-year silver price trend, the prices have hovered around ₹35,000-40,000 for most of the years. A spurt in the prices was long overdue and we can see firm trend continuing amid current global economic situation,” he added.
Notably, silver prices had crossed ₹70,000 a kg in April 2011 and touched an all-time peak of ₹74,300 a kg.
In the past one month, silver (999 purity) has gained from Rs.42,035 a kg to Rs.49,950 a kg as quoted by IBJA. Unlike gold, silver has vast industrial applications in pharmaceuticals, electronics, solar energy, and automobiles among others. An increased industrial demand and consumption may push up sentiment for silver and is likely to create a situation similar to 2011 for record levels. The two important factors to influence the silver prices is a firm trend in global silver prices and rupee depreciation.