Silver Prices Surge Rs 5,901 on MCX Amid Global Shifts

MCX silver prices staged a notable rebound, rallying by Rs 2,699 (1.12%) to settle at Rs 2,43,350 per kg. This surge marks a significant recovery of Rs 5,901 (2.46%) from its day’s low of Rs 2,39,049.

Gold also registered gains, increasing by 0.20% to reach Rs 1,59,320 per 10 grams. Analysts point to a confluence of factors contributing to this bullish sentiment across precious metals.

Key Market Drivers

• A recent fall in prices made precious metals more attractive.
• Declining crude oil prices eased inflation concerns.
• Worries regarding the US Federal Reserve’s interest rate hikes have abated.
• A weaker US dollar, slipping below the 99 level, boosted metal appeal.
• Central banks maintained sustained gold purchases.
• Exchange Traded Funds (ETFs) recorded increasing inflows.

Market participants are now keenly awaiting US Fed Chair Kevin Warsh’s speech at the Jackson Hole Symposium for further guidance on future interest rate trajectories.

Monarch PMS Price Projections

Monarch PMS has outlined its price projections for gold and silver through the end of 2026, based on varying probabilities.

• Base Case (55% probability):
  • Gold: $4,300-$4,700 per ounce.
  • Silver: $70-$85 per ounce.
• Bull Case (25% probability):
  • Gold: $5,000-$5,600 per ounce.
  • Silver: $95-$120 per ounce.

The base case scenario assumes the Fed maintains rates through September, energy prices stabilize, real yields plateau, and central banks continue quarterly purchases of approximately 250 tonnes.

The more optimistic bull case hinges on a weakening labor market, prompting the Fed to ease repo rates, a decline in real yields, a resumption of institutional investment in precious metals, and a return to physical tightness in silver markets.

Silver Supply Dynamics

Silver’s fundamental supply-demand picture remains robust, showing a sixth consecutive annual deficit. Since 2021, 762 million ounces have been drawn from above-ground stocks, while mine supply has remained largely flat for a decade.

The article highlights that paper claims on COMEX stand at approximately 5.6 times the registered physical inventory. This suggests that any significant increase in demand could substantially amplify price increases due to existing physical tightness.

Gold-Silver Ratio Normalises

The gold-silver ratio has seen a normalization, rising from 46x at its January peak to around 69x. This level approaches its 21st-century average, with Monarch PMS using 60x as its model’s benchmark, indicating silver’s relative undervaluation.

Technical Levels to Watch

For MCX gold, key technical levels include support at Rs 1,56,000 and resistance at Rs 1,67,000, with a potential to surpass Rs 1,72,000 upon breaching resistance.

MCX silver shows support at Rs 2,35,000 and resistance at Rs 2,52,000. These levels will be crucial for traders monitoring further price action.