Silver, gold's shiny and less expensive cousin, is both a bullion for sentimental hoarding and an industrial metal. Both factors could play out in the next few months, say experts.
The path is risky for investors, say analysts, because riding piggyback on the back of gold is hurt by an emotional downturn, while an economic slowdown weakens industrial demand.
“Downside risks for silver is higher as that commodity not only takes its cues from movement in gold and other precious metals, but also from industrial metals,” said Reena Rohit, chief manager for non-agricultural commodities at Angel Broking.
Renisha Chainani, commodity analyst at Edelweiss Securities, said it is difficult to say whether the white metal price has bottomed out — which would be a cue for investors to get in.
“I am not seeing strong momentum and value buying at these levels. Prices have not given any major breakout or trend reversal signs,” she said.
“Silver at current market prices is not a bet to buy in. I won't say that it is bottomed out as there are many events lined up in coming months especially from US,” said Ashok Mittal, co-head for retail investing at Emkay Global Financial Services.
He was referring to the cheap money policy in the US that may be reversed, threatening commodity investments.
Silver finished at Rs 42,510 per kg in Indian markets on Saturday.
Overall, in the coming months analysts expect commodity prices to move down due to an easing of cheap money and increased spending cuts in the US.
Things could perk up in a possible festival and marriage season buying, expected after two or three months, Mittal said.
A slowdown in China could hurt industrial metals as a whole. Rohit said he expected price trends to stay bearish in the wake of economic uncertainties across the globe. He has a target price of Rs 43,000 in the next two-month period.
“I would advise the investor to buy silver on dips in range of Rs 38,000 to Rs 40,000 for a target of Rs 45000 per kg before the year-end,” said Chainani of Edelweiss. Mittal expects silver to dip lower to the Rs 35,500-36,500 range before buying emerges to take the price level to Rs 45,000.