Silver Climbed To All-Time High Fueled By Robust Investment And Industrial Demand.

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Silver Climbed To All-Time High Fueled By Robust Investment And Industrial Demand.

Yesterday, silver prices surged by 4.66%, settling at 95267, driven by strong investment and industrial demand. While ETFs have shown limited interest, physical sales of silver have increased, reflecting its perceived undervaluation. In January, the gold-to-silver ratio exceeded 90, the widest gap since September 2022, but it has since narrowed to around 80 and is expected to further decrease to 70 if the Federal Reserve cuts rates and the US economy remains resilient. Recent US consumer inflation data and a key monthly jobs report have increased the likelihood of Fed rate cuts in 2024. However, this optimism is tempered by rising export and import prices and hawkish comments from policymakers. 

Silver also benefits from its critical role in solar panel production, expected to reach a record high this year, pushing the silver market into its fourth consecutive deficit. The global silver deficit is projected to increase by 17% to 215.3 million troy ounces in 2024, driven by a 2% rise in demand, led by strong industrial consumption, and a 1% decline in total supply, according to the Silver Institute. Global supply has remained steady at approximately 1 billion ounces, while industrial demand experienced an impressive 11% growth. Stocks held in commodity exchange depositories and London vaults fell by 5% last year, amounting to nearly 15 months of global supply at the end of 2023. 

From a technical perspective, the market is experiencing short covering, as indicated by a 4.39% drop in open interest, settling at 30148 while prices increased by 4243 rupees. Currently, silver has support at 92760, with potential testing at 90250 if it falls below this level. Resistance is anticipated at 96630, with a move above possibly pushing prices to 97990.

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