Data shows that the prevailing US - China trade dispute has put strains on the global economy. As per the latest IMF report, the global growth rate is projected to be 3.5 percent for 2019 and 3.6 percent for 2020, lower than its earlier forecast in October.
The precious white metal, silver, is trading near multi-month highs in the international market. Since mid-November last year, the commodity has gained about 15 percent due to escalating global geopolitical tensions and a weak dollar.
Tracking overseas prices coupled with weak domestic currency, silver prices in the Indian market too have gained sharply.
Silver has been in an extreme bear market since hitting its all-time high of $49.51 in December 2011.
The metal price has been confined in a tight range of $22.16-13.6 an ounce since 2013. Upbeat global equities and a rally in US dollar made the sentiment for metals like silver feeble.
The performance of Indian futures prices was also not different during that period.
Gold’s cheaper cousin’s safe-haven demand rose recently amid the US-China trade disputes and prospects of a lower number of rate hikes by the US Federal Reserve in 2019.
Supply shortage due to a shortfall of new mines amid lower prices and worries on the global economic slowdown also benefited the commodity.
Data shows that the prevailing US - China trade dispute has put strains on the global economy. As per the latest IMF report, the global growth rate is projected to be 3.5 percent for 2019 and 3.6 percent for 2020, lower than its earlier forecast in October.
This is the second time in a row that the agency has predicted a weak global growth rate. A weak global growth forecast has prompted investors to bet on a safe haven asset like silver.
As an investment avenue, silver is considered to be a secure and affordable investment and has earned a place in portfolios of many investors.
The demand-supply fundamentals too propped up sentiments. Mine output of silver posted a record sixth straight year of decline last year.
Output throughout the globe has seen a decline especially from top producers like Peru, China, and Argentina due to supply disruptions. Mexico ranks first among silver producing nations. Mexico, Peru, and China account for about half of the global silver production. Reports say that silver production for the year will be at its lowest level since 2013, hence physical demand for the commodity is most likely to surge higher.
Higher demand for silver has been reported from India. As per the GFMS gold survey report, silver jewelry consumption in India had increased by 20 percent in the fourth quarter due to its affordability, and as an alternative to gold jewellery.
However, silver prices in India have a bearish tone even though recovery was seen in gold and multi-year lows in domestic currency.
In the meantime, the slow global economic activity had an adverse impact on the industrial need for silver. Though the commodity is highly popular among consumers as jewellery, the metal has numerous industrial uses.
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