Silver trades at six-month low of $12.11

Silver is likely to test the downward psychological barrier of $11.85 an ounce and Rs 16,500 a kilo in international as well as domestic markets respectively, taking cue from industrial and other PGM group metals.

Presently silver is quoting Rs 18,020 in Mumbai, while the white precious metal is sold at $12.11 an ounce, a level which was not seen since January 8, in the London bullion market. "If the price bottoms out at Rs 16,500 a kilo in Mumbai then the next target would be at Rs 15,600 a kilo, which if tested would create havoc for silver jewellery manufacturers in India as they are reeling under low profitability amid declining exports," said Suresh Hundia, a silver trader and the president of the Bombay Bullion Association.

Silver, however, marginally increased by 0.5 per cent in early morning trade in London on Wednesday and slipped to $12.11 within an hour which experts believed would continue for long. "There is absolutely no reason why silver was going in almost one 'upward' direction uninterruptedly. Hence, prices have to come down irrespective of its demand globally," Hundia added.

Tejas Parekh, research analyst, Motilal Oswal Commodities Broker, said that "silver has broken below its 200 day moving average of $12.11 an ounce giving bearish signal. If gold also closes below its 200 day moving average of 641, then it will also see further fall in prices."

For the last two years, India has recorded imports of 1,000 tonnes every year, which indicates that the domestic demand (industrial and consumer) has not come down.

Although, Mahavir Agarwal, proprietor of Jaipur-based Classic Gems International feels silver price to remain depressed, the demand is not likely decline at all as the players like us have continued introducing innovative designs to lure customers.

"Silver jewellery is purely meant for those classes of customers who cannot afford gold jewellery but want to feel same pride. With an investment of just Rs 200-300, silver can be bought. Additionally, silver is also being considered as an investment option. Hence, the demand would continue to surge throughout," said Agarwal.

He feels that the exports have declined roughly 15 per cent because of the appreciating rupee.

"A correction was due since long which has not yet taken its toll fully. This necessarily means that the price is likely to decline to $11.85 very soon. In case the white metal breaches this level, it would test another downward benchmark set at $11.65," said a noted precious metals analyst.