In a first, silver futures hit ₹100,000/kg mark on MCX as China cuts loan rates | Stock Market News

Mumbai: A silver futures contract on commodity derivatives exchange hit the ₹100,000-per-kg mark for the first time on Monday, rising in tandem with record-high gold prices, buoyed by a cut in one-year prime loan rate by China to boost its sagging economy and a higher gold-silver ratio, which increases headroom for silver to outperform the precious metal.

Silver for 5 March delivery hit a record high of ₹100,564 per kg on MCX as of 5:13 pm IST and traded at ₹100,304, up 2.7% from Friday closing, at the time of writing on Monday. Mint had on 22 May written about prices of the white metal heading to a historic ₹100,000-mark.

MCX trading runs from 9 am to 11:30 pm during normal session and till 11:55 pm during daylight savings.

“It’s historic to see a six-digit figure but will be interesting to see whether the near month contract on MCX hits the lakh mark,” said Viral Shah, head of brokerage at 360 One Wealth.

The near month contract is the closest to the spot market price. On MCX, that contract expires on 5 December and traded at ₹97,190 per kg intraday Monday.

This contract has the maximum traded volumes of 12,341 lots. The March contract had a volume of 914 lots at the time of writing.

Drivers of the surge

The jump in price in the next month beyond ₹100,000 is because of the carrying cost, which includes warehousing and insurance charges.

“Normally, silver contracts trade at a premium or contango,” said Gnanasekar Thiagarajan, director of commodity research firm Commtrendz.

He attributed silver contracts crossing the ₹100,00-mark to the China rate cut on Monday and a rising gold-silver ratio.

In an investor presentation after its September quarter results, Hindustan Zinc cited the high ratio as one of the reasons for silver outperforming gold.

The ratio stood at 83.11 on Friday against the historic average of 82.55, per Bloomberg. It means that one ounce of gold was worth 83 ounces of silver. In the past five years, the ratio surged to a high of 123.74 on 18 March 2020 at the emergence of the pandemic and slipped to a low of 64.15 on 25 February 2021. It has since been rising.

Unlike gold, which is a precious metal, silver qualifies as an industrial metal too, used in photovoltaic applications and in silverware, apart from jewellery.

Global silver demand was forecast at 1,219.1 million ounces against supply of 1,003.8 million ounces in 2024, per The Silver Institute, a non-profit international association drawing its membership from constituents across the silver industry.

MCX, the country’s largest commodity derivatives exchange with a 98% share as of August ( ₹45.2 trillion), facilitated the highest-ever silver delivery per contract of 208 tonnes on 5 March followed by 100.6 tonnes on 3 May.

The MCX stock ended up 0.87% at ₹6,629 on the NSE on Monday.