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Silver

MCX Silver Futures has fallen during the March month so far, due to rising bond yields and US Dollar Index even though the United States has released its $.19 trillion stimulus package that have led to resuming of the industrial and manufacturing activates. However, silver prices had also gained back some strength during the last week due to strong US economic data that cooled off the US Dollar Index. By 15th March, MCX Silver futures closed at Rs.67669/kg, higher by 0.61% compared to Rs.67261/kg reported on 26th February.

For the coming month, we are estimating MCX silver prices to trade mixed as ETF investments has shown slowdown in the global markets due to strong US Dollar Index. Correspondingly, silver prices to also find support from the lower levels as the industrial demand is expected to find further recoveries and global markets are expected to resume business activities. Conversely, silver eagle coins sales on the monthly basis, may prominently see limited rise as lockdown situation is damaging the US economy for the short term period. Currently the gold silver ratio which has come down to 65-66 levels still indicating cheaper silver prices which can support prices from the lower levels. In the case of India, the Central Government's effort to revive the economy with easing lockdown situation, by boosting industrial activities in construction and infrastructure developments is another added factor for silver prices strengthening. However, ongoing worries about the covid-19 situation in the some of states such as Maharashtra could sentimentally cap extreme upside movement in MCX silver prices. Correspondingly, the Indian equity market which had shown outstanding movement in the month of February, is showing some corrections and sideways movement in this month, however the long term growth outlook for the year 2021 is expected to bein double digits. Overall, investors with cautious note should remain sideways in MCX Silver futures for the month ahead.

On a weekly chart, MCX Silver has been trading in Symmetrical Triangle Pattern with the support at Middle Bollinger Band formation, which indicates pullback in the counter for the near term. Moreover, the price has also sustained above 21 weeks Simple Moving Averages which suggests positive trend for upcoming weeks. Amomentum indicator RSI (14) is reading at 56 levels, which supports the bullish moves.However, an oscillator stochastic snowed negative crossover which point-out some weakness. Based on the above technical structure, we are recommending buy on dips strategy in Silver (May) future for the long term. One can initiate a long position around 66500 levels for the upside target of 69500 levels. However, the bullish view will be negated if MCX Silver (May) closes below the support of 65000 level.

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