Silver prices witnessed a sharp decline on the Multi Commodity Exchange (MCX) on Monday, with the white metal plunging more than Rs 7,000 per kg and falling below the crucial Rs 2.28 lakh mark amid a broad-based sell-off in precious metals.
The sharp decline came as rising crude oil prices heightened global inflation concerns, strengthening expectations that the US Federal Reserve could keep interest rates higher for longer or consider further policy tightening.
Higher interest rates and elevated US Treasury yields typically weigh on precious metals, which do not generate interest income. A stronger US dollar also makes dollar-denominated commodities more expensive for overseas buyers.
Silver falls over 3% on MCX
During noon trade, the December silver futures contract on MCX was trading at Rs 2,27,494 per kg, down Rs 7,202, or 3.07 per cent, from its previous close of Rs 2,34,696.
Market experts said the immediate resistance for silver is seen at Rs 2,32,000-Rs 2,33,000, followed by Rs 2,36,000-Rs 2,37,000.
On the downside, immediate support is placed at Rs 2,27,000-Rs 2,28,000, followed by Rs 2,23,000-Rs 2,24,000.
Analysts also noted that the Relative Strength Index (RSI) stood at 41.12, below its signal line, indicating fading momentum.
COMEX silver also under pressure
Silver prices also remained under pressure in international markets. COMEX silver opened at $64.66 and was trading near $62.40, down 3.72 per cent during the session.
The metal slipped below the $63.50-$64.00 zone, which had earlier acted as support and could now act as resistance. Silver was testing the $61.50-$62.00 support region.
"Silver remains weaker than gold in today's session," market watchers said, placing immediate resistance at $63.50-$64.00, followed by $65.50-$66.00. Support was seen at $61.50-$62.00, followed by $59.50-$60.00.
Experts also noted that silver remained below its 20-, 50-, 100- and 200-day exponential moving averages, while the RSI continued to move lower.
Dollar-rupee movement
Meanwhile, the USD/INR pair opened at 95.80, up 0.13 per cent, and was trading just below the 96 mark.
Immediate resistance was placed at 96.00-96.10, followed by 96.40-96.50, while support was seen at 95.70-95.80 and then 95.40-95.50.
The pair remained above its key short-term moving averages. The RSI at 59.51, above its signal line, indicated a mild bullish bias for the dollar, suggesting continued pressure on the rupee.
Overall, silver remained under pressure as higher crude prices, inflation concerns, elevated yields and a stronger dollar weighed on the precious metal.
