This means a potential upside of 28% from current levels and if this materializes it will contrast with the lackluster performance of last year. In 2021, MCX gold and silver gave negative returns of 4% and 8%, respectively.
“In the short term, Fed policy decisions and volatility in yields and the dollar could weigh on prices; although growing inflationary pressure, geopolitical uncertainties, a surge in the global appeal of safe havens could support the price of silver,” said Navneet Damani, Senior Vice President – Commodities Research, Motilal Oswal Financial Services.
He said volatility could take prices to lows of Rs 60,000 followed by Rs 58,000 as well, while immediate resistance is at 65,500 and a sustained break above could push prices higher towards Rs 67,500.
The brokerage firm believes that such a drop should be a good opportunity to accumulate.
Citing Silver Institute, Motilal Oswal said global silver demand will hit a record high of 1.112 billion ounces in 2022. The increase will be driven by record industrial silver manufacture, which is expected to improve by 5%. , as the use of silver expands in both countries. traditional and essential green technologies.
On the other hand, physical silver investment demand is expected to jump 13% in 2022, reaching a 7-year high. Silver use in jewelry and silverware is also expected to strengthen in 2022 by 11% and 21%, respectively.
This gap between supply and demand will likely be reflected in the price.
Recently, a number of mutual fund companies have launched silver exchange-traded funds (ETFs), a first in India. They will provide more opportunities for investors to invest in silver.
“Market participants had several sources to invest in gold, although there were limits to investing in silver. Investors now have the option of investing in Silver ETFs, which could also be a supporting factor for metal prices amid rising demand,” Damani said. “With 2021 not being a positive year and prices currently hovering around lows, another source investing in silver could be a game-changer on the home front.”
Silver prices generally track gold prices, but limited price decoupling may be possible. Unlike gold, which is primarily traded for investment or jewelry production, silver is used in a range of industrial applications, particularly electric vehicles, solar panels and medical devices, some of which have attracted increased interest over the past year.
“Silver with a dual benefit of taking advantage of uncertainties and inflationary pressures and rising industrial demand is supporting metal prices,” Damani said.