Author: Sabah Novinfar
Demand surge in India: Divali and the impact of expensive gold
October is always a booming month for silver demand in India as we approach Diwali, the festival in honor of the goddess of wealth. But this year, demand has been higher than expected. The rise in gold prices has led many Indian consumers to turn to a cheaper and more attractive alternative: silver.
Local investors and influencers have been encouraging people to buy silver with their educational videos and advice. Even major refiners have been unable to meet the demand, and the silver premium in the Indian market has reached more than $5 per ounce. Vipin Raina, a silver market manager, told Bloomberg:
"Most people who work with silver and silver coins have virtually no inventory. I have never seen a market like this in my 27 years of experience."
London's liquidity crisis; Behind the scenes of the global market
But the problem is not limited to India. The global silver market, especially London treasuries, is also under severe pressure. Much of the silver in London is allocated to ETFs, leaving little free silver to provide liquidity.
The shortage caused the cost of borrowing silver to rise by more than 100% annually, widening the price gap between London and New York. Some traders were even forced to move silver from other global centers such as COMEX to Europe and India to meet market demand.
Trade news and monetary policy; two opposing forces
Trade tensions between the US and China also played a role in reducing the pressure on silver buying. Trump has expressed hope that a deal can be reached before his meeting with Xi Jinping and negotiations to reduce tariffs are ongoing. The news caused demand for silver as a safe haven to decrease and put pressure on prices.
on the other hand , the expected reduction of interest rates by the federal reserve can support silver . reducing interest rates lowers the cost of holding a silver without yield and increases its attractiveness for short term investors .
technical analysis of silver ; ascending trend continues
key support : EMA 20 days around $ 49.34
key resistance : historical record $ 54.50
momentum : the 14 - day high speed RSI indicates a strong upward trend
despite short term withdrawal , the overall process of silver is still rising and traders can use support points for entry and resistance to exit .
the opportunities and risks for the traders
silver is now moving between two market forces : reducing trade tensions that creates sales pressure and expects a decrease in the interest rates that support prices . these fluctuations provide many opportunities for professionals , but at the same time it has high risk .
the real shortage of silver , the purchasing pressure from india and the global fluctuations caused every price movement to react with the fast market reaction . any decision to purchase or sell should be taken with respect to the economic , commercial , and the world 's world trends .
summing up : silver is still attractive
finally , the main problem of the market is still standing : there is no silver and no silver is printed . however , the same shortage and high demand have created significant profitability opportunities for traders and professional investors .
the key to activity in this market is that you need to consider technical analysis , business news and monetary policies to make accurate and profitable decisions . silver , while challenging , remains one of the most attractive options for professional investors and traders .