With the Indian rupee having gained 7.3 percent against the U.S. Dollar since the end of August alone, silver prices express in rupees will likely soften in the near term.
This led at least one analyst to predict that silver's price direction in the short term could depend on Indian investors.
Combined with seasonal demand, a strengthening rupee could impact physical demand for silver going forward at a time where strong physical demand is the only thing left keeping many weak silver longs from panicking.
Large Non-For-Profit Seller Reported
Furthermore, in a relatively thin market conditions surrounding the Columbus Day U.S. holiday weekend, the silver market once again reportedly saw a very obvious and large "not for profit" seller start to show up.
The all-too-familiar resulting decline in silver futures prices seemed designed to trigger stops placed by weak longs, thereby causing even longer term silver holders to express concern.
However, the manipulation does not seem to working this time. The longs have remained, with some traders merely buying dips in the day to day price action. Tuesday's session was a good example of this.
Silver Remains Popular in China and Indian Demand May Rise in November
Despite the sharply rising rupee potentially dampening Indian demand for silver, the grey precious metal has stayed in vogue in other parts of Asia.
For example, silver futures were up 29% on the Shanghai Futures Exchange at the end of September compared with the end of June, while gold gained only 13%, according to data from the exchange's website. Silver has been one of the biggest recent gainers in the metals complex traded in Shanghai.
Furthermore, Chinese demand for physical silver delivery has not changed that much. China currently remains a net importer of silver when it had been a net exporter of the metal for many years.
Despite the popularity of silver with the Chinese, the silver market seems more focused on Indian investors and their potentially decreased interest in silver due to their currency's sharp appreciation instead. India reportedly amounts to 12.6 percent of the overall global demand for silver.
Nevertheless, other observers noted that cultural factors in India may have been more responsible for the reduced Indian demand for silver in October, leading them to expect that strong demand for silver from Indian consumers will resume once again in mid-November.
Silver demand from Asia, and especially India may be all that is keeping the longs in silver futures from exiting their paper positions at the COMEX. http://www.silver-coin-investor.com
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