Last week, precious metal selling saw the market decline for three of the five trading days. However, bargain hunting on Thursday and Friday saw the market recover to test the bear trend from March’s peak. The recovery in silver has been helped by a new tax on Gold and Platinum announced when the Indian finance minister revealed his budget for 2012.
Silver has remained outside the double tax on the other precious metals and may benefit from a spread narrowing between gold and silver. However, for the market to confirm a more prolonged recovery, a break above 32.86 is needed in the coming week. This would see the negative trading pattern since the beginning of the month moderate and generate buying interest for a retest on 34.45, the March 9 high. Above this area the outlook for silver would improve considerably.
However, failure to hold above last week’s base at 31.62 would indicate that bearish investor sentiment is strengthening and traders would shift their focus to 30.75 and 30 levels in silver trades.