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Silver

MCX Silver Futures has fallen during the August month so far, due to higher US Dollar Index with the US FED in its minutes indicating a caution stance on the health of the U.S. economy. Moreover, the demand scenario from China has remained sluggish due to rise in delta variant cases which has weighed on the silver prices along with other base metals. By 26th August, MCX Silver futures closed at Rs.62723/kg, lower by 7.59% compared to Rs.67847/kg reported on 30th July.

For the coming month, we are estimating global silver prices to trade sideways to bullish as industrial demand, which makes up about 50% of the silver market, will provide some critical support with higher demand in the semi-conductor industry. Correspondingly, silver prices to also find support from the lower levels as the global manufacturing has been reported to be expensive for imports. Moreover, silver eagle coins sales on the monthly basis, may prominently see fall, even though vaccination process is expected pick up pace, with China moving ahead with price corrections. The gold silver ratio which has come up to 75-76 levels from 70-72 levels from the last month still indicating cheaper silver prices as compared to gold. In the case of India, higher demand during the festive season in India is expected to bring upside movement in the silver commodity. Prices of silver is expected to peak in the month of November at the time of Navaratri Festival. This is expected to weaken the base metal prices in the near term along silver prices. One central area of demand for silver continues to be in solar power generation. Silver is a critical component in photovoltaic (PV) solar panels. Metals Focus said that demand for solar power will only continue to grow, and it looks like thrifting of the precious metal has reached its limit.Overall, investors with cautious note should remain bearish or sell on rise in MCX Silver futures for the month ahead.

On a weekly chart, MCX Silver (Dec) future has been trading in a Symmetrical Triangle pattern from last few weeks. Although, the price has taken support of prior demand zone & lower band of pattern, which indicate a bullish reversal in the counter for the near term. Moreover, an oscillator Stochastic RSI is also suggested positive crossover, which is again an upside confirmation. Furthermore, the price is hovering near the lower band of Bollinger Band, which indicates an immediate support & bullish set-up in the counter. Hence, based on the above technical structure one can initiate a long position in MCX Silver (Dec) future at CMP 63785 or a fall in the price till 63600 levels can be used as a buying opportunity for the upside target of 66400. However, the bullish view will be negated if MCX Silver (Dec) future closes below the support level of 62490.

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