Silver has emerged as a standout performer in May, outstripping the S&P BSE Sensex, gold, and Bitcoin amid market volatility. The white metal’s robust gains have been attributed to its industrial utility and expectations of interest rate cuts, sparking investor interest.
According to market reports, silver has surged by 11.29% or over Rs 9,580 per kg in the first two weeks of May, accounting for a significant portion of its year-to-date increase of 21%. Notably, July silver futures on the MCX reached an all-time high of Rs 90,391.
Factors Driving Silver’s Rally
Anuj Gupta, Head Commodity & Currency at HDFC Securities, cited the anticipation of a Fed rate cut and an uptick in global manufacturing activity as key drivers of silver’s recent rally. Similarly, Naveen Mathur, Director – Commodities & Currencies at Anand Rathi Shares and Stock Brokers, attributed the surge to expectations of a structural deficit in the silver market and increased demand from the green economy.
Confidence in Silver’s Sustainability
Jigar Pandit, Head Commodity & Currency Business at Sharekhan by BNP Paribas, expressed confidence in the sustainability of the silver rally, foreseeing improved industrial demand from China and a supportive macroeconomic environment.
Akshaya Tritiya Boost
The rise in silver prices coincided with Akshaya Tritiya, a period considered auspicious for buying precious metals. Analysts anticipate silver to trade within a range, with short-term targets ranging from Rs 85,000 to Rs 92,700.
Analysts’ Recommendations
While bullish on silver’s prospects, analysts acknowledge the potential for minor corrections and advise investors to consider risk tolerance when allocating to the precious metal.
Conclusion
Silver’s recent performance underscores its appeal as an investment asset, driven by industrial demand, interest rate expectations, and supply-demand dynamics. However, investors should remain vigilant and diversify their portfolios to mitigate risks associated with market fluctuations.