Gold prices up 25% this year. But this metal has given 50% returns1 min read . Updated: 31 Dec 2020, 10:09 AM IST
- Supporting silver price is US stimulus measures, improving industrial demand outlook and optimism about global economy, say analysts
If you are surprised at gold's 25% gain this year, there is a bigger surprise. Silver, which is often referred to a gold's poor cousin, has logged about 50% gain so far this year. In global markets, spot silver today traded at $26.64 an ounce, up 49% this year, according to Bloomberg. Among other precious metals, palladium is on course for a fifth consecutive annual gain, with a rise of more than 20% in 2020. Platinum has climbed 11%.
Meanwhile, gold is set to cap the biggest annual advance in a decade, rising about 25% in 2020.
In India, both gold and silver have also logged strong gains in 2020. Gold is up about 27% so far this year while silver about 50% amid a tumultuous year. In August, gold had hit a new high of ₹56,200 per 10 gram while silver had edged closer to ₹80,000 per 10 gram as investors sought haven assets amid the pandemic. The surge was supported by unprecedented waves of stimulus, which fanned concerns of currency debasement. Holdings in bullion-backed exchange-traded funds set an all-time high in October, although they’ve since ebbed with the roll-out of vaccines.
Currently, gold trades about ₹50,000 per 10 gram in futures market while silver at about ₹68,500 per kg.
"Supporting silver price is US stimulus measures, improving industrial demand outlook and optimism about Chinese economy. ETF inflows also show some pick up in investor interest," Kotak Securities said.
In the near term, silver may witness "choppy trade unless there is clear direction in gold price. However, weaker US dollar and pick up in investor buying may keep prices supported," Kotak Securities said in a note.
Recovery upticks in silver may continue while global prices stay above $25.50, Geojit Financial said in a note. However consistently below $25 may reveres the momentum and take prices lower. MCX silver February futures have resistance at ₹70180 while support at ₹66,200. (With Agency Inputs)