Silver prices have rebounded from the low levels seen yesterday, with the metal commanding a huge premium following scarcity in the physical markets. Premium for spot delivery rose to around 3 to 4 per cent today.
The reason for this is that at lower prices, demand was quite high while supplies were limited. Even silver micro futures (1 kg) on the MCX, which can be used by retail investors to take deliveries, is quoting at a premium, indicating that market doesn’t have enough floating stock of the white metal.
There was a spurt in demand when silver was trading below Rs 34,000 per kg. However, dealers who had bought the metal when prices were high a week or two ago, preferred to hold their stocks till they could get a premium and curtail losses Imports too have reduced with major supplying