Silver Hits Record High Amid Geopolitical Concerns and Anticipation of US Rate Cuts
In Mumbai, the price of silver soared to an unprecedented peak on Monday, driven by persistent geopolitical tensions and the anticipation of interest rate reductions by the US Federal Reserve, sparking a surge in precious metals. Experts forecast an additional rise of 10-15% from the current figures for silver, highlighting the potential for further gains.
Silver futures witnessed a significant uptick, climbing over 10% in a week to reach a record high of Rs 82,109 per kilogram on the MCX. This rally in both silver and gold, aiming to surpass their multi-year highs, signals a robust bull market for precious metals. Historically, silver has demonstrated superior performance to gold in such market phases.
Sahil Kapoor, a market strategist at DSP Mutual Fund, emphasized the favorable conditions and the long-awaited breakout for silver. He advised investors to maintain or establish their silver allocations in anticipation of future growth. Silver's price movements are closely aligned with gold but are also influenced by its industrial applications in electronics, batteries, and semiconductors, further buoyed by recent base metal price rallies following positive manufacturing data from China.
Contributing factors to silver's upward trajectory include heightened demand due to Middle East tensions and substantial purchases by China. Additionally, remarks by Federal Reserve Chairman Jerome Powell on potential cautious rate cuts have bolstered silver's long-term bullish outlook, as noted by Naveen Mathur, director for commodities and currencies at Anand Rathi Shares and Stock Brokers.
Global demand for silver is projected to increase by 1% to 1.2 billion ounces in 2024, with supply expected to rise by 3% to 1.02 billion ounces, according to a report from the Silver Institute. In light of silver's performance parallel to gold, some financial advisors recommend allocating 5-10% of an investment portfolio to silver, emphasizing its role in diversification strategies.
