Silver prices hit 11-month low: What's affecting the precious metal?
What's the story
Silver prices in India have hit an 11-month low, with the MCX silver rate falling below ₹2 lakh per kg. The decline is mainly due to a drop in industrial demand and a high-interest-rate regime that limits investment returns. The current price is about 53.5% lower than the record high of ₹4,20,048 per kg on January 29.
Expert opinions
AI meltdown has limited demand for silver
Market experts suggest that the current slump in silver prices is mainly due to falling industrial demand and a high-interest-rate regime.
Anuj Gupta, a SEBI-registered market expert, said, "The AI meltdown has limited demand for silver in the chip-making industry," while "a slump in solar panels has hit silver demand in China."
He added that both these factors have greatly impacted the industrial demand for this precious metal.
Investment appeal
High-interest-rate regime limits investment returns
Gupta also noted that the buzz around a US Fed rate hike and other central banks following suit has created a high-interest-rate regime. This has hurt the investment appeal of silver.
Nirpendra Yadav, Senior Research Analyst at Bonanza, noted that a "stronger US dollar and elevated bond yields are weighing on investment demand."
He also said concerns over industrial demand are adding to the pressure on silver prices.
Future outlook
Experts expect silver prices to recover soon
Amit Goel, Chief Global Strategist at PACE 360, expects silver prices to recover soon as the factors pulling them down may fade.
He said, "The triggers dragging the silver rates today may evaporate soon as US bonds are in an overbought condition and AI meltdown buzz is already around.
Gupta advised investors to consider an accumulation range of ₹1,78,000-₹1,85,000 for both new and existing investors if silver prices sustain above ₹1,70,000 level.