Silver futures sank more than 1 per cent during noon trade in the domestic market on Tuesday as the yellow metal failed to live up to its reputation as a safe haven asset even as shares in China sank more than 7 per cent, marking the biggest four-day slide for the country's stock markets in nearly two decades.
A stronger dollar cut the demand for Silver as an alternative asset. Strengthening greenback makes Silver more expensive for those holding other currencies, thus dimming demand. The rupee, which recovered modestly against the greenback today, slid to a fresh two-year low on Monday as foreign investors shunned risky assets amid the China induced mayhem. Silver, being denominated in dollars becomes more expensive for Indian buyers when the local currency loses value.
At the MCX, Silver futures for September 2015 contract is trading at Rs 35,000 per 1 kg, down by 1.16 per cent after opening at Rs 35,314, against the previous closing price of Rs 35,410. It touched the intra-day low of Rs 34,861. (At 12:18 PM).