Silver witnessed a roller-coaster ride in 2022, thanks to increased volatility in the bullion market and industrial metals but managed to deliver around 15% returns to investors. The metal faced bouts of profit taking but geopolitical tensions kept its demand intact.
Silver, other than being a precious metal, has more usage in the industrial sectors and thus, industrial demand also guides its movement. Furthermore, gold also holds influence over silver prices.
Rahul Kalantri, VP-Commodities, Mehta Equities, said, “In the mid of 2022, we saw see a significant fall in silver prices because of the low industrial demand due to a global slowdown and a drastic jump in dollar index as well as bond yields.”
Silver has its own return characteristics and is an attractive commodity in the present market conditions.
NS Ramaswamy, Head of Commodities,
Securities said, “The gold-silver ratio is currently at 78:1 and we could expect the regression to mean levels of 60, which is bullish for silver.”
He added that cool off in inflation numbers, and peaking of the dollar supported silver but the hawkish commentary from US Fed and aggressive rate hikes in 2022 kept gains in check.
Even as an industrial metal, silver has its utility in multiple areas, including green technology, suggesting scope for upside in the metal.
“The supply side for silver looks to be diminishing. Its inventory is at a two-year low globally while output from mines has also been dropping continuously, making silver attractive for the medium term,” said Kalantri.
Market participants continue to remain positive on silver both as bullion and as an industrial metal. They expect it to scale new highs in 2023.
Ramaswamy believes that silver will trade in the range of Rs 64,000-69,000 in the short term, whereas he expects it to remain in the range of Rs 67,000-72,000 in Q1CY23 and Rs 70,000-75,000 in Q2CY23.
Other analysts suggest that silver might lose some ground in the near term but any fall can be taken as a buying opportunity.
“2023 is looking brighter. We are very optimistic that silver would deliver a significant return to its investors,” said Kalantri from Mehta Equities.
“We are expecting silver to touch Rs 72,000-76,000 levels,” said Kalantri. “Rupee movement against the dollar is important to watch while considering the domestic market.”
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)