Silver prices in India witnessed a sharp recovery, with strong buying emerging after the recent correction ahead of the Dhanteras and Diwali festivals.
MCX silver futures were trading higher by Rs 1,052, or 0.56%, at Rs 1,88,787 per kg. The contract touched an intraday high of Rs 1,90,946. In two trading sessions, silver prices have surged by Rs 11,248, or 6.25%. Analysts believe the white metal could reclaim the Rs 2 lakh mark in the near term.
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In the international market, precious metal prices gained amid a weaker US dollar and easing US Treasury yields following the Democrats' decisive victory in the US midterm elections.
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Spot silver prices rose 1.7% to $53.12 per ounce after gaining nearly 5% in the previous session.
The defeat of US President Donald Trump's Republican Party in the midterm elections raised hopes of a possible resolution to the US-Iran conflict, triggering a sharp decline in crude oil prices. Lower oil prices eased inflation concerns, putting downward pressure on US Treasury yields and weakening the dollar as bets for US Federal Reserve interest rate hike decreased.
Lower bond yields generally support gold and silver, as these precious metals do not offer interest income. Meanwhile, a weaker dollar makes bullion cheaper for buyers holding other currencies, supporting demand.
“The US midterm election outcome has raised questions about Trump's policies regarding military action and the ongoing conflict with Iran. Lower oil prices could help bring inflation down and reduce the chances of a Fed rate hike, putting pressure on the dollar index. Hence, a weaker dollar is also supportive of bullion,” said Jigar Trivedi, Senior Research Analyst at IndusInd Securities.
Meanwhile, silver prices declined by more than 9% in September and 18% in October. Against this backdrop, Trivedi believes there is a reasonable possibility of a technical rebound.
Ponmudi R, CEO of Enrich Money, noted that domestic silver prices are tracking the recovery in international markets, although the appreciation of the rupee is limiting some of the upside.
“Lower bond yields and a weaker dollar are providing additional support, while silver's exposure to industrial demand remains an important underlying factor. Nevertheless, the sharp losses recorded last month could attract selling interest at higher levels,” Ponmudi said.
Can Silver Hit Rs 2 Lakh?
According to Trivedi, the outlook for silver remains positive, with last-minute festive buying ahead of Diwali potentially providing additional support.
“COMEX silver has strong support in the $48-$50 zone, while resistance is placed in the $55-$60 range. On MCX, support for silver is seen at Rs 1,75,000 per kg, while resistance is placed at Rs 2,10,000-Rs 2,20,000 per kg,” Trivedi said.
Ponmudi noted that silver's technical structure indicates a potential double-bottom formation around the Rs 1,76,000-Rs 1,80,000 region, where prices have found support on two occasions.
Momentum indicators are also showing early signs of recovery. The Relative Strength Index (RSI), currently near 37, is moving away from oversold territory, while the narrowing MACD histogram suggests that bearish momentum is gradually weakening.
“The near-term bias remains positive, provided prices sustain above Rs 1,86,000-Rs 1,88,000. A decisive break below this range could expose the next support at Rs 1,78,000-Rs 1,80,000,” he added.
MCX Silver: Key Support And Resistance Levels
The metal has moved above the Rs 1,86,000-Rs 1,88,000 range, which is now expected to act as immediate support. The next support zone is placed at Rs 1,78,000-Rs 1,80,000.
On the upside, immediate resistance is seen at Rs 1,94,000-Rs 1,96,000, followed by the next resistance zone at Rs 2,00,000-Rs 2,02,000.
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