New Delhi

Silver futures bounced back nearly 2 per cent to Rs 2.27 lakh per kilogram on Thursday as value buying at lower levels helped the white metal erase early losses despite lingering geopolitical tensions in West Asia.

On the Multi Commodity Exchange (MCX), the most traded contract for September delivery climbed Rs 3,841, or nearly 2 per cent, to Rs 2,27,278 per kilogram in a business turnover of 11,186 lots.

Traders said bargain hunting after the recent correction, coupled with firm global cues, supported the recovery in the white metal prices.

However, gains remained capped after US President Donald Trump declared the interim peace agreement with Iran "over", escalating geopolitical tensions and keeping investors cautious, Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said.

She added that India's silver imports plunged in May following import restrictions, tightening domestic supplies and pushing local premiums to a six-month high.

"However, weaker imports may weigh on global silver prices while helping reduce India's trade deficit and support the rupee," Yadav said.

In the international markets, Comex silver futures for September delivery rose a little over 2 per cent to USD 59.73 per ounce in New York.

Yadav said market participants have increased the probability of a September US Federal Reserve interest rate hike to 51 per cent, reducing the appeal of non-yielding assets such as silver.

She added that minutes of the US Federal Reserve's June policy meeting showed policymakers remained divided over the interest rate outlook.

However, most indicated that further policy tightening could be required if inflationary pressures persist, keeping sentiment toward precious metals cautious.

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Analysts said investors will closely monitor developments in the Middle East, upcoming US macroeconomic data and comments from Federal Reserve officials for further cues on the direction of silver prices.