Wealthova: “Silver Futures Drop ₹1,137 to ₹2.36 Lakh/kg Amid Oil Rally Impacting Bullion Demand”
The recent decline in silver prices, which fell by Rs 1,137 to Rs 2.36 lakh per kilogram in futures trade, reflects a cautious sentiment among traders amid rising crude oil rates and a strengthening US dollar. On the Multi Commodity Exchange (MCX), the May contract’s price slipped by 0.48% to Rs 2,36,208 per kg, with a notable business turnover of 2,020 lots. A similar downward trend was observed in the July contract, which dropped by Rs 1,964 or 0.81% to Rs 2,40,799 per kg over 6,868 lots traded. This volatility indicates a market adjusting to prevailing economic indicators and geopolitical tensions, particularly those linked to stalled US-Iran negotiations and heightened inflation worries stemming from energy price fluctuations.
Analysts, including Renisha Chainani from Augmont, highlight that the confluence of persistent higher energy prices, a robust dollar, and stronger interest rate expectations have intensified the short-term challenges facing precious metals. The closure of the Strait of Hormuz, deemed a significant disruption by the International Energy Agency, amplifies inflationary pressures and negatively impacts global energy supplies. Consequently, market participants are increasingly factoring in further interest rate adjustments by central banks, as indicated by recent decisions from the Bank of Japan and upcoming meetings of the US Federal Reserve, the European Central Bank, and the Bank of England. These adjustments structurally diminish the appeal of assets such as silver and gold during periods of rising borrowing costs.
Looking ahead, Chainani projects that silver is approaching USD 73 per ounce in global markets, equating to Rs 2.35 lakh per kilogram domestically. Maintaining prices beneath this threshold could see silver’s next downside target at USD 70 per ounce, translating to approximately Rs 2.25 lakh per kilogram. This outlook suggests that unless there are significant shifts in the economic landscape or resolution of key geopolitical issues, silver prices may continue to face downward pressure, warranting close monitoring of market developments and central bank policies in the near term.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)