Silver futures on the MCX platform on Monday crossed Rs 25,000-mark mainly on some investment buying amid strong global markets. MCX Silver March 2008 and May 2008 contracts were trading higher by over Rs 1,000 a kg to quote around Rs 25,323 and Rs 25,730 a kg, respectively, over past two days. Silver spot price in Mumbai and Ahmedabad on Monday failed to touch the magic mark but prices moved up sharply following the strong rally witnessed in gold.
Silver spot price in Mumbai market was quoted at Rs 24,570 per kg on steady buying by investors as an alternative investment option, supported by strong gold price in the overseas market.
?Fresh demand for silver in the local market is very low. Silver scrap inflows are around 500 kg a day. Prices are moving up mainly in tandem with global markets,? Mahavir Jain, a local bullion dealer said.
Silver spot prices jumped by 23% to reach at Rs 24,570 a kg on Monday from Rs 19,937 a kg quoted on January 4, 2008. ?Investors are holding this metal to protect their buying power as the US dollar falls to a record level and inflation accelerates,? an analyst said.
Spot gold in US market had jumped as high as $980.75 an ounce, partly driven by purchases from Japanese speculators who took advantage of the dollar’s drop to a three year low against the Japanese yen, said Debjyoti Chatterjee, analyst with Mape ADMISI group.
Gold had already gained more than 17% in 2008 on heavy fund inflow into commodity markets, expectations of more interest rate cuts in the US, volatile stock markets and rising energy costs.
Dollar extended previous declines and tumbled to a record low against a basket of currencies as fears of a US recession stoked expectations of aggressive rate cuts.