Silver Poised to See Golden Times Ahead as Analysts Pin Hopes on Bull Run

For silver, it's clearly a Ka-Ching moment. The white metal's price level surpassed a 13-year high mark on Comex. At home, Silver futures climbed to a record high of ₹1,07,073 per kilogram, according to MCX data. With geopolitical turbulence still at play coupled with industrial demand gaining momentum, commodity market players believe that silver might shine brighter than gold this year.

While the yellow metal continues to witness range-bound momentum, there has, quite evidently, been a pause on the gold rally witnessed earlier this year. However, silver prices are now playing on-board a catch-up rally. "Spot prices surged by 9% last week to hit the highest since 2012, compared with gold’s gain of less than 1%. The jump all but erased its performance gap with bullion, with both metals now up by about a quarter year to date," Nirmal Bang stated in its report.

Despite increased trade talks between nations on the tariff front, uncertainty still remains the buzzword in the geopolitical sphere. Central banks are still adding gold, with the PBOC confirming a fresh round of accumulation.

"The trade war rumbles on, notwithstanding the US-China talks planned in London. And jitters about the US fiscal position remain, including questions over the appetite for longer-duration bonds. All of that is feeding renewed demand for silver-backed ETFs," the report further read. "Silver’s playing catch-up in a big way, and may outpace gold in the short term."

More Headroom for Silver?

Even as the price of white metal witnessed a robust uptrend over the past few weeks, analysts are expecting this rally to continue ahead. This is largely owing to silver's undervaluation relative to gold.

On top of that, the demand for 'safe-haven' asset class stays robust. This is largely due to a weaker dollar index which is currently hovering around 99 level mark. A weaker dollar makes silver and other dollar-priced commodities more attractive to global buyers. This eventually boosts the demand levels further, not ignoring the Russia-Ukraine conflict adding to the uncertainty.

"The outlook for silver in the coming weeks appears robust, underpinned by safe-haven demand amid persistent geopolitical and economic uncertainties... the historically elevated gold-to-silver ratio, which measures how many ounces of silver are required to purchase one ounce of gold, also highlights silver’s relative undervaluation," said Tejas Shigreka, chief technical research analyst-commodities and currencies at Angel One.

Analysts pointed out that surpassing the key psychological resistance level of $35 per ounce has sparked a surge in trading volumes and renewed strong interest from both institutional and retail investors.

Key Levels to Watch

"Gold has support at $3,280-$3,265 while resistance at $3,325-$3,340. Silver has support at $36.10-$35.80, while resistance is at $36.75-$36.95. In INR gold has support at ₹96,720-96,390, while resistance at ₹97,350-97,640. Silver has support at ₹1,06,160-₹1,05,250 while resistance at ₹ 1,08,750-₹1,09,650," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

While the overall outlook for the white metal remains bullish, commodity analysts continue to raise banners of cautious optimism. Given the ongoing macro setup, including volatility in the dollar index, tariff mayhem and the upcoming commentary from the Federal Reserve, there's a good chance that commodity prices might see more fluctuations ahead. However, strong interest from both institutional and retail investors makes the overall outlook quite bullish, keeping the price levels on solid ground.

"From a technical perspective, silver has exhibited noteworthy strength, gaining approximately 8.7% in the first week of June following a decisive breakout past critical resistance levels... continued price consolidation above the current pivotal thresholds is likely to further reinforce upward momentum, signaling sustained strength in the metal’s trajectory," said Shigreka.