Silver, as an asset class, continues to remain under pressure. On Tuesday, the metal was trading 2.15% lower at $76 an ounce in the US spot market, whereas the silver futures at India's Multi Commodity Exchange (MCX) were down 0.77% at Rs 274,508 per kilogram at 4:55 pm.
Analysts at Kotak Securities cautioned that silver is under pressure due to inflation concerns, firm crude oil prices and weak Chinese economic data, which is adversely impacting investor sentiment around bullion.
Kotak Securities noted that silver initially remained under pressure after crude oil prices climbed to a three-week high, pushing global bond yields higher and fuelling concerns over sticky inflation. Weak economic data from China further weighed on the metal due to fears of softer industrial demand from the world's largest consumer of metals.
On the other hand, Brent crude prices, which have an inverse relationship with gold and silver, stayed firm at $111 an ounce.
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Kotak Securities said traders should closely monitor crucial downside levels in both domestic and international markets.
For MCX Silver July futures, immediate support is placed at Rs 2,71,601 per kg, followed by Rs 2,68,635. The brokerage warned that a breach below these levels could drag prices lower towards Rs 2,59,035.
On the upside, resistance for MCX Silver July futures is seen at Rs 2,81,201 and Rs 2,84,167.
In the international market, spot silver support is placed at $74.35 per ounce, with stronger support around $73.25. A plunge below these levels can take the metal below $70. The support level in such a scenario is seen at $69.65.
On the other hand, resistance levels are seen at $77.90 and $79.00, according to the brokerage note.
Kotak Securities added that investors will closely track upcoming FOMC minutes and flash PMI data for further cues on inflation, interest rates and industrial demand trends.
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