Silver settled up 0.79% at 42204 as escalating tensions in Iraq attracted some safe-haven bids, but investors were awaiting a Federal Reserve meeting this week before taking any big positions. Also support seen on MCX as support seend after rupee weakened to its lowest level in more than a month on Monday as surging crude oil prices threatened to push up domestic inflation pressures and aggravate the country's CAD. Concerns over the ongoing Sunni insurgency in Iraq continued to weigh on the dollar Monday by stoking fears that escalating conflict could dampen global recovery, especially if the conflict disrupts Iraqi oil exports, hikes prices at U.S. gasoline pumps and waters down the economy. Geopolitical concerns boosted bullion, as the metal tends to trade inversely from the dollar, while news that the IMF trimmed its 2014 U.S. economic growth forecast due to a harsh winter and “still-struggling housing market” supported the precious metal as well. The IMF said it now expects the U.S. economy to expand 2% in 2014, down from its forecast of 2.8% in April. Positive U.S. data, meanwhile, capped gold's gains, as the numbers solidified market expectations for the Fed to wind down its monthly bond-buying program possibly this year. Silver ending the week with a 3.5% gain. However, the metal lost momentum as support stemming from strong demand in India started to fade away. India bought 6,016 tonnes of silver in 2013, all-time high, but the recent data showed the country’s silver bar imports dived over annualized 74% in March, according to the GJEPC. Technically market is under short covering and getting support at 41969 and below same could see a test of 41735 level, And resistance is now likely to be seen at 42467, a move above could see prices testing 42731.

Trading Ideas:

Silver trading range for the day is 41735-42731.

Silver prices traded near a three-week high as ongoing concerns over violence in Iraq supported demand for safe-haven assets.

Markets players continued to monitor developments in Iraq, where the conflict continued over the weekend.

Holdings at ishares silver trust dropped by 0.58% i.e. 59.74 tonnes to 10261.98 tonnes from 10321.72 tonnes.