Silver MCX prices witnessed positive movement since starting of this year and in early July, it tested the Rs 49,000 per kg level on the upside. Silver witnessed almost 40 per cent rise in the price as compared to last year due to strong industrial demand coupled with the geo-political situation in world economies.

Silver prices has been surging following impressive rally in gold prices, which on International front was driven by a weaker dollar and delay in interest rate hike by US Federal Reserve. In end of June, prices rallied due to global economic unrest after people of Britain voted for “Brexit” from European Union and this decision put white metal to rally to nearly 3-year high.

Demand from Chinese buyers was a contributing force, as reported by the Wall Street Journal that Asian buyers were quick to dive into physical silver.

Silver prices are still sustaining above the major psychological support level of Rs 45,000 per kg and further it will take cues from US Federal Reserve interest rate hike programme and implications of Brexit. Technically, in near term (1-2 months), we can expect profit booking in it from the higher levels and it test the level of Rs 45000 per kg on the downside.

In the 3rd quarter of the financial year 2016-17, we can again expect the bullish movement in silver prices and it can test the level of Rs 50,000 on the upside. it can test the we can expect after testing the level of Rs 49,000 on the upside. Silver has witnessed good returns against gold and increasing international ishares ETF demand which is world largest ETF, showed buying sentiment in white metal.

Demand for silver has been weak in recent years as investors have seen prices trend lower. Silver’s demand covers silver’s use in industry (63 per cent of fabrication demand), jewellery manufacturing (25 per cent), photography (5 per cent) and silverware (7 per cent). In 2014, fabrication demand climbed 2.2 per cent to 27,080 tonnes, according to data from the World Silver Survey.

Although we saw increase in the industrial demand in the last quarter of financial year 2015-16, but according to sources, industrial demand, which accounts for 63 per cent of total silver demand, is likely to fall further this year after falling 4.1 per cent in 2015 on weaker industrial demand growth.

(The author is founder and CEO, CapitalVia Global Research)