Upbeat Forecast Lifts Silver

Silver prices were rallying Wednesday as the dollar weakened and word emerged that interest from India for the metal has been strong.

July-dated silver contracts were ahead by 14 cents at $13.13 an ounce in recent New York futures market action.

"We have seen tremendous physical demand for silver imports into India of late," says Andy Montano, director of precious metals at Toronto-based bullion bank ScotiaMocatta. He also adds that the greenback's slight softness overnight was having a buoying effect on the metal's price.

The U.S. dollar was recently trading at 121.48 yen, down slightly from 121.58 yen late Tuesday. The euro was selling for $1.3459, up from $1.345 previously. The prices of dollar-denominated assets, such as the precious metals, tend to increase as the value of the U.S. currency declines.

Also adding shine to silver was a bullish annual silver survey from London-based specialty metals consulting firm GFMS. The report's authors project last year's robust market will continue through 2007 with conditions remaining "supportive of prices well into double-digits," meaning above $10 an ounce.

Strong investment demand, led by the introduction of the silver exchange-traded fund, iShares Silver Trust(SLV Quote), drove the average price for the metal up 58% in 2006. The ETF absorbed 121 million ounces following its May launch. Meanwhile, demand for silver used in industrial applications fell only 1% during the year despite the higher prices, the report states.