Silver sets new record on high consumption

Growing industrial consumption triggered silver prices to rise by Rs 65 in Zaveri Bazar to set a new record here on Thursday. The precious white metal closed at Rs 59,015 a kg, leading to a reduced interest in trading. Continuous rise in prices has surprised consumers. A city-based trader argued that silver could not continue setting new upward records everyday and, hence, a correction looked imminent.

In New Delhi, too, silver jumped by Rs 200 to trade at Rs 58,600 a kg, on stockists’ buying on a firm global trend. The commodity has been setting high records globally for the last five days. The metal surged 0.6 per cent to breach a 31-year high record in London. A weak dollar also supported the commodity’s upward journey.

Suresh Hundia, owner of Hundia Exports and former president of the Bombay Bullion Association, attributed the rise in prices to consumers’ shift from gold to silver. As gold prices had become unaffordable for the average middle-class, they were gradually shifting towards silver. Thus the consistent rise in prices, said Hundia.

Meanwhile, silver has offered over 25 per cent returns in the last two months, making production an attractive investment option for traders.

Silver prices for next month’s contract on the Multi Commodity Exchange also climbed to a new record. The contract for December delivery jumped by Rs 60, or Rs 0.1 per cent, to trade at Rs 60,160 a kg late in the afternoon. Similarly, the metal for May delivery rose to Rs 58,035 a kg by early evening. Standard gold prices, meanwhile, remained unchanged at Rs 20,980 per 10 gram in Mumbai.

Traders believe geo-political tension was fueling the prices of precious metals, with silver set to gain the most in coming days. With crude oil reaching a saturation point of $108 a barrel, silver remained the only option for those seeking to protect their wealth against the conflict in Libya and the European sovereign debt concerns.