Silver (XAG): Strong Indian Demand and Duties Drive Prices Higher
LONDON (September 24) Silver (XAG/USD) has regained positive momentum, rising above the $31.00 mark during Tuesday’s Asian trading session. After a brief decline, the white metal now sits just below the $31.45 resistance level, which it hasn’t reached since mid-July.
Indian Festive Demand and Import Duty Cuts Fuel Silver Surge
A major driver behind silver’s recent strength has been heightened demand during India’s festive and wedding seasons. The Indian government’s recent decision to reduce import duties on gold and silver from 15% to 6% has further stimulated buying activity.
ajesh Rokde, a prominent jeweller, predicts that “silver prices could continue to rise as demand remains strong, particularly given the reduced import costs.”
Supporting this trend, India’s silver imports surged in August 2024, jumping to $1.33 billion (Rs 11,038 crore), dramatically increasing from $158 million (Rs 1,317 crore) in August 2023.
Gold imports also saw a remarkable rise, growing by 103.71% to approximately $1.02 billion (Rs 84,401 crore) during the same period. The strong domestic demand, coupled with favourable pricing conditions, points to continued upward pressure on silver prices.
U.S. Rate Cuts and Economic Uncertainty Add to Bullish Sentiment
In the United States, expectations of further Federal Reserve rate cuts are adding fuel to the silver rally. Following last week’s 50 basis point reduction, market analysts anticipate an additional 125 basis points in cuts by 2024.
A weaker U.S. dollar, under pressure from these dovish expectations, has made silver more appealing to investors seeking a hedge against economic uncertainty.
Kishor Sheth, another jeweller, noted that international demand for silver remains robust. “Favorable market conditions and strong global demand are keeping prices elevated,” he said, emphasizing the broader impact of U.S. monetary policy on silver markets.
Overall, with solid fundamentals in place, including Indian demand and the potential for further U.S. rate cuts, the outlook for silver remains bullish in the near term.
Short-Term Forecast
Silver (XAG/USD) remains bullish above $30.98 support, with key resistance at $31.19. A breakout above $31.20 could signal further gains, targeting $31.42 in the near term.
FXEmpire
