Last week, spot silver prices continued to lack momentum and direction as it once again moved sideways for majority of the trading sessions. The market remained cautious ahead of the crucial EU summit on Friday. On Thursday however, prices plunged nearly 3.0% after ECB President Mario Draghi dulled investor hopes of a central bank intervention in the bond markets following a benchmark interest rate cut. Buying appetite seems to have shrunk along with a decline in physical demand.
Analysts estimate a majority of the cut back in demand has stemmed from India, the worlds biggest buyer of the commodity. With the rupee depreciating by more than 7.0% since November, investors from India continue facing a hard time buying precious metals. The commodity also remained under pressure with people selling into rallies to minimize their losses. The current macroeconomic environment is expected to hold back the industrial demand, which in turn would add pressure to the already struggling silver prices.
An increase in the Euribor / OIS spread in recent days also shunned investment demand away from the white metal with the market keenly following the developments in the European region.
The gold to silver ratio decreased for the second consecutive week, falling to 53.10 from 53.4.
