Silver bottoms out, but looks poised for recovery

Traders were more active in mini contracts that the standard contracts due to the uncertainty prevailing in the market, analysts said. Low volumes and fall in open interest in COmex silver portends weakness to continue for some more time in silver. Silver is also not likely to get any support from the base metals complex which also remains weak due to weak

NEWYORK/ MUMBAI (Bullion Street): US silver futures seems to have bottomed out at $22 per ounce levels and looks poised for some upward moves although volume and open interest has dropped signficantly over the past week. At India's Multi Commodity Exchange, Silver May contract is o.64% at Rs 43693 per kg on Monday afternoon trade.

" On daily charts both Comex silver and MCX silver seems to have bottomed out and looking for a push upwards although recovery signs are weak," Sreekumar Raghavan, Investment Strategist at Commodity Online Group said. Prices are still below the 20 day SMA of Rs 47635.40 at MCX while RSI of 19.76 is extremely bearish and still in oversold territory, he added.

Traders were more active in mini contracts that the standard contracts due to the uncertainty prevailing in the market, analysts said. Low volumes and fall in open interest in COmex silver portends weakness to continue for some more time in silver. Silver is also not likely to get any support from the base metals complex which also remains weak due to weak China GDP data although better US Q1 GDP data due on Friday 26 April and Japan's monetary accomodation and likely ECB rate cuts may help push silver prices higher, analysts added.

Next major resistance for Comex silver is seen at $26 while support is seen near term at $22.75 and RSI of 24.42 is still bearish oversold territory, Sreekumar Raghavan added.

"The sharp fall in the prices of gold and silver may have stemmed from the shift in market sentiment towards precious metals. The minutes of the previous FOMC meeting, the decision of BOJ to augment its asset purchase program, the weak economic data on China may have also contributed to the tumble in gold and silver prices. Following such a sharp drop in prices, a correction might occur that will pull up gold and silver. But as the week will progress, if the current bearish market sentiment towards precious metals will persist, gold and silver are likely to resume their downward trend," according to a market review published in Seeking Alpha.

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