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MCX-Silver futures contract fell 2.5 per cent last month. However, the 21-month moving average support at ₹38,408 per kg has halted the fall. If the contract sustains above this support, a bounce back move to ₹41,000 or even ₹42,000 is possible. However, the downside pressure will ease only if it manages to breach above ₹42,000. Such a break can take the contract higher to ₹43,000 and ₹44,000 thereafter.
However, the broader picture will remain bearish as long as the contract trades below ₹42,000. A strong break below the 21-month moving average support at ₹38,400 may bring in fresh selling. Such a break will increase the likelihood of the contract tumbling to ₹35,500. On the global front, spot silver prices have a strong resistance in the $16.5-$17 zone.
Inability to break above this level may keep the prices under pressure for a test of $15.5 and $15. The level of $15 is a strong support for silver and an immediate break below it less likely. A strong reversal from around $15 will increase the possibility of a fresh rally targeting $17.
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