Down over Rs 18,000 from peak price, should you buy silver now?

New Delhi: Among the precious metals, silver has been underperforming consistently for sometime now. A record-breaking bull run in equities and a stronger dollar have diminished the lustre of the white metal quite a bit.

Spot prices of silver were pinned around Rs 60,000 on Wednesday, before slipping to Rs 59,714 earlier this week, highlighting that the precious metal has failed to attract investors in recent times.

In the last 13 months, silver has tanked as much as Rs 18,250 from its peak of Rs 77,949 hit in August 2020. In the last couple of weeks, it has shed more than Rs 5,200 in the spot market.

Analysts said silver is taking cues from gold trends and higher bond yields in the US. They are expecting more correction in the white metal in the short term.

Anuj Gupta, Vice President (Commodities), IIFL Securities, said the demand for silver is expected to increase, but due to strength in the dollar, demand for bullions as a safe haven asset has faded On MCX, silver may test the Rs 57,000-55,000 level, he said.

Kshitij Purohit, Lead Commodities & Currency at CapitalVia Global Research, echoed similar views and said the white metal is in a bearish mode with some upside corrections due.

“The price has been declining, thanks to a firm dollar, higher bond yields and stronger economic readings,” Purohit said.

Ahead of the busy festive season in India, demand and prices of silver are expected to increase. Retail purchases in the coming month may support prices of the bullion.

“Despite having stronger fundamentals than gold, silver has not been able to cross the highs of 2011,” said Purohit.

From a longer term perspective for investment, one can buy silver for festival and investment purposes, analysts said.

“Downside is limited and on the upside sky is the limit,” Gupta said and suggested buying the white metal on every correction as it can be a profitable strategy going forward.

He expects silver to test the Rs 70,000-75,000 levels in 6-12 months. “Inflation, industrial demand and geopolitical tension may support the bullion in the long run,” he said.