Silver came down amid stronger dollar, lowering bullion prices, retreating base metals and weak equity markets.
Key Observations
Silver futures for March-delivery closed down by 1.80% to $29.25/oz yesterday. Positive data releases from the U.S. and fears that Spain’s credit rating may be downgraded stoked dollar’s demand.
The dollar gained more than 1% to close up at 80.229 levels against six major currencies. Equities were lower yesterday as Eurozone debt concerns resurfaced after Moody signaled to lower the credit rating of Spain. On the other hand, U.S. economic data came positive, but overshadowed by debt concerns.
The benchmark MSCI World Index for stocks closed down by 0.63%. iShares Silver Trust maintained its holdings at 10964.14 MT yesterday. MCX silver futures for March-delivery lost 0.74% to close down at `44,442/kg yesterday. Rupee depreciated by 1% to 45.3975/USD yesterday.
Outlook
Silver fell further to $29.04/oz in Asia in line with falling bullion prices and weak equity markets. Base metals are also trading marginally down on London Metal Exchange. These all factors may drive silver prices also down.
Day ahead, PMI numbers from Europe, housing data and jobless claims data from the U.S. will provide some volatility to prices.
The dollar is expected to remain firm on positive data expectations which will continue to pressurize precious metals.
