Silver Surpasses Gold, Sensex, and Bitcoin in May
In a volatile May, silver has emerged as the shining star in the market, outperforming the S&P BSE Sensex, gold, and Bitcoin. The white metal has seen a remarkable jump of nearly 11.29% or over Rs 9,580 per kg in the month so far, driven by its industrial appeal and renewed hopes of interest rate cuts.
Silver’s rally in the first two weeks of May already accounts for 60% of the gains it has seen in 2024. The metal is up 21% or Rs 16,000 per kg year-to-date, hitting a lifetime high of Rs 90,391 on Friday, July silver futures on the MCX.
In comparison, the Sensex has slipped, starting the month at 74,482.78 and finishing at 73,917.03. Gold has gained 4.45% or Rs 3,135 per 10 grams in the same period, with a year-to-date increase of 16.38% or Rs 10,359. Bitcoin has also seen gains of 4% or $2,605.
Factors Driving Silver’s Surge
Anuj Gupta, Head Commodity & Currency at HDFC Securities, points to the anticipation of rate cuts by the Fed and improving global manufacturing activity as key drivers of silver’s rally. The metal’s new highs are fueled by expectations of a fourth year of structural deficit and increasing demand, particularly in green economy applications like the photovoltaic sector.
Naveen Mathur, Director of Commodities & Currencies at Anand Rathi Shares and Stock Brokers, expects a 20% increase in demand for silver in 2024, driven by its use in the green economy. The bullish buying trend was also supported by declining stockpiles tracked by the LBMA.
Outlook and Strategy
Analysts believe that silver prices will continue to rise in the coming months, with Gupta expecting a rally towards $34 to $36 per ounce in the short term. A breakout above $36 could lead to further upside potential. Mathur predicts a target of Rs 1,00,000 for silver.
Although analysts remain bullish on silver, they caution that minor corrections cannot be ruled out. Pandit recommends buying on dips, with resistance expected around Rs 92,700. Mathur sees buying opportunities in the range of Rs 85,000–84,000, with potential returns of 15–20%.
Overall, aggressive traders are advised to allocate 15% to 20% to silver, while moderate risk takers and conservative investors should consider allocations of 10% and 5%, respectively. The market is expected to take cues from international rates, with a positive outlook for silver in the near term.
