The demand for silver in the country fell 50 per cent today as the metal's overseas spot price rose overnight to a 22-year high "" $10.59 an ounce "" pushing up local prices by Rs 270 to Rs 14,750 a kg. | |
| Silver's overseas prices rose following a US Securities and Exchange Commission order paving the way for the launch of a fund that would invest in the metal. |
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| The SEC has approved a change in rule that will allow a silver fund from Barclays Global Investors to list on the American Stock Exchange, although the regulator has not cleared the fund's launch yet. |
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| The price of ready silver (.999 fineness, ex-Mumbai) opened the day at Rs 14,750 a kg, compared with the previous closing of Rs 14,480. |
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| Contrary to the frantic buying seen in New York in anticipation of the exchange-traded fund's launch, the domestic demand fell considerably, as even industrial buyers preferred to stay away. |
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| Apart from jewellery, silver has industrial usage in photography and electronics. Silver prices have risen 20 per cent since January in anticipation of the fund launch and are due for correction. |
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| The overseas prices are expected to rise further to $11 an ounce until the collection for the exchange-traded fund is over. This will also keep the domestic prices up. |
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| According to V Sivaramakrishnan, executive director of Dubai-based Kombench DMCC, "The domestic demand will pick up once the collection is over. But the price range will change and the consumers will have to get used to seeing silver at the over-$9.5-an-ounce level." |
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| The annual demand for silver in India is about 4,500 tonnes, including about 2,500 tonnes that the government needs. The Silver Users' Association, a non-profit lobby group, said the silver fund would create shortage of the metal in the market. |
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