Kamal Ghorui
Hyderabad & Mumbai: Silver’s unprecedented surge continued Friday. In late trades on the New York Commodity Exchange (Comex) the price of the white metal crossed the psychologically important $100-per-ounce (Oz) mark for the first time in history. Gold, which has gained at a much slower pace than silver in recent months, neared the $5,000/Oz mark.In the domestic market in late trades on MCX, silver futures contracts for March delivery was trading at Rs 3.4 lakh/kg, a new life-high level while the high for gold futures for Feb delivery was at close to Rs 1.6 lakh/10 gm. Both were all-time high levels.In Mumbai’s spot market for bullion, silver traded at about Rs 3.3 lakh level while gold was at Rs 1.55 lakh.A combination of factors is acting as the tailwinds for the rally in the two precious metals. The tense geopolitical situation around the world, especially due to sudden and unexpected decisions by the US president Donald Trump is leading to economic uncertainties around the world. Such decisions are also prompting global investors to lose their faith in fiat currencies and move towards real assets, analysts said. Industrial demand for the white metal, mainly from fast-growing industries like EV, semiconductors and solar, is also adding to the supply-demand mismatch, they said.Avinash Gupta, vice-chairman, All India Gem & Jewellery Domestic Council, pointed to rising geopolitical risk fuelling the unprecedented rise in precious metals prices. “The geopolitical scenario is pretty bad with fears rising that Trump may attack Iran any time,” he said, adding that silver could even scale $150 dollar by year’s end as per his conservative estimates. According to Saumil Gandhi, senior analyst-commodities, HDFC Securities, “strong investment flow and strong physical demand,” combined with the weakness of the dollar, strong retail and HNI buying, and a “historic short squeeze” in silver are leading to the sharp rise in its price.“The US dollar index has fallen more than 1% this week, supporting bullion as investors rotated into real assets amid shifting US–Europe tensions linked to Greenland and concerns Europe could leverage its holdings of US assets. In silver, China’s tightening export controls and constrained availability have added to the squeeze,” Gandhi said.Global investors’ tumbling belief in the dollar as a universal currency is a serious issue in determining the price of silver, industry veterans said.“Several countries are either not interested in buying US treasuries and trying to offload them, resulting in the shifting to safe haven assets (like gold, silver etc),” said Surendra Mehta, national secretary, India Bullion & Jewellers Association. “Japan too is pulling out of US bonds as interest rates are increasing in Japan. The momentum is in favour of gold and silver.”
