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According to Motilal Oswal Financial Services Report, after experiencing significant gains in the first four months of 2023, silver encountered some volatility at higher price levels. After every major dip domestic silver price have been seeing a range shift on the higher side and MOFSL expects this trend to continue. MOFSL expects that the momentum in Silver is likely to continue, and could add another 15% over the next few quarters.

MOFSL advises continuous accumulation at lower levels with immediate supports at ?70,500, while strong medium-term support is at ?68,000. On higher side MOFSL could see prices targeting ?82,000 followed by ?85,000 over the next 12 months.

Moreover, the market balance indicates that this could mark the third consecutive year of silver operating in a deficit.

Perspective

In early 2023, silver had a strong performance, gaining approximately 11% in the first four months and maintaining a 6% overall gain.

The initial rally was driven by concerns in the US banking and debt sectors, but this momentum was somewhat tempered by the Federal Reserve's "Hawkish Pause" policy, impacting both precious and industrial metals.

With the US Consumer Price Index (CPI) at 3.2%, down from its peak of 9.1% in July 2022, central banks are revaluating their policies, potentially leading to a shift in the Fed's stance from tightening to easing, which could benefit metals like silver.

Geopolitical tensions are contributing to a risk premium, supporting silver prices. Additionally, the Dollar Index rebounded sharply from around 99.60 to 104. The Fed's raised growth forecast for the US in 2023, signalling a soft landing, is favourable for industrial metals and silver alike.

Data from the Silver Institute suggests that the market balance could remain in deficit for the third consecutive year, further supporting silver prices. Positive signals from China regarding economic growth and industrial demand are potential catalysts for silver's performance.

Lastly, the demand for silver in green technologies such as solar energy, electric vehicles (EVs), and 5G technology continues to paint a promising outlook for the silver market.

Silver Fundamentals

Anticipated growth in industrial demand is poised to play a substantial role, complementing the advancements in green technology. Global economic growth indicators will be crucial in the medium-term outlook.

Approaching the festive season, domestic demand is expected to bolster silver prices positively. While concerns about a recession have diminished, any resurgence of uncertainty regarding economic growth could boost silver's appeal as a safe-haven asset, in tandem with gold.

Silver benefits from a dual advantage, being influenced by both industrial and precious metal fundamentals, offering support at opportune times. Historically, after significant declines, domestic silver prices have exhibited an upward trend, and MOFSL anticipates this pattern to persist.

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