At times like these when the global economy is in doldrums, safe-haven asset gold is most likely to shine. Basking in gold’s glory is silver, another precious metal and also an industrial asset.

Last week, domestic silver prices touched a multi-year high of 49,846/kilogram. By Monday, prices in the spot market stood at 46,905, giving up recent gains.

Factors that have attracted investors towards silver are similar to those driving gold prices. These include, trade war uncertainty, a fragile global growth outlook, and the dovish stance of most global central banks, among others. As a result, investment demand for silver has risen.

"According to the latest data, inflows in world’s largest silver exchange traded fund, the iShare Trust have surged to record levels indicating increasing appetite for silver. The gold-silver ratio, which rose to a 25 year high of 93 odd level around July, indicated that the latter is poised to rally. Currently the gold-silver ratio is at 81 odd mark," said Sugandha Sachdeva, vice president at Religare Commodities Ltd.

Apart from the safe-haven demand, silver prices are also said to be driven by upbeat demand from the solar panels industry.

Despite that, silver prices have failed to sustain at elevated levels. So has been the case with gold. Commodity analysts said though the global economy is not out of the woods yet, there is also lack of clarity on whether we are heading towards a global recession. So, prices of both precious metals would consolidate for now.

Hitesh Jain, Vice President, Yes Securities Ltd said, “The recent surge in silver prices was a catch-up rally. It was not backed by a lot of underlying fundamental factors. There are still concerns on global growth and trade war but most of those variables are baked into the prices of both these precious metals for now, at least. They have touched their near-term peaks," Jain added.

According to Sachdeva of Religare Commodities, in rupee terms, 44000/kilogram level will act as a strong support for silver. In dollar terms, “for now we see prices at $16.50-17/ounce, but eventually silver prices may rally to $25/ounce once they break past the crucial barrier of $20/ ounce," she said.

Meanwhile, gold prices in rupee terms touched 38,254/10grams on Monday, retreating from its recently touched six-year high of 39,600.

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