Silver seen firm on crude, keeps buyers at bay

By Ruchira Singh

MUMBAI (Reuters) - India's silver prices are seen firm this month with support from higher crude oil and weaker dollar keeping it out of favour with price-sensitive Indians.

"Demand for silver is as good as nil," said Haresh Acharya, head of the bullion desk at Parker Agrochem Exports Ltd, a large wholesaler in Ahmedabad.

"The rural demand as a result of a normal monsoon is expected to show only after August."

India's annual demand of 3,000-4,000 tonnes is seen severely eroded this year due to high prices, with gold being an additional competitor, as buyers value the yellow metal more than the white one.

Conservative estimates show imports of silver could be only about 32 tonnes in the first half of the year against 730 tonnes in Jan-June last year, said Suresh Hundia, president of the Bombay Bullion Association.

"Whatever little demand there is, is being met via recycled silver in the local market," Hundia, who is also a big silver trader, said.

Only a fall below 20,000 rupees per kg could boost demand, Hundia added.

But prices looked far from that level with crude oil near record highs sending investors to the safety of gold and silver, an analyst said.