Silver experienced a notable increase of 3.53% yesterday, closing at Rs 141889, driven by anticipations of declining real interest rates and constricted supply conditions that bolstered market sentiment. The most recent report indicated that inflationary pressures have remained subdued, reinforcing the outlook that the Federal Reserve may implement additional rate cuts in the current year. This bolstered demand for non-yielding assets such as silver, as diminished carrying costs enhance investor interest.
Meanwhile, personal spending in the US increased by 0.6% in August, surpassing expectations and indicating consistent economic momentum. On the supply-demand front, industrial consumption remains strong, driven by solar energy, electric vehicles, and electronics manufacturing, maintaining usage levels above 700 Moz each year. Nonetheless, production growth is limited since silver is mainly extracted as a byproduct of copper, lead, and zinc, resulting in output projected to be around 844 Moz in 2025 and perpetuating a significant structural deficit.
The Silver Institute anticipates a fifth consecutive annual deficit this year, as demand exceeds supply by over 100 Moz. ETP inflows demonstrated robust performance, with 95 Moz added in H1 2025, bringing total holdings to 1.13 Boz, nearing historic peaks. In terms of regional performance, retail investment in India experienced a year-on-year increase of 7%, whereas Europe showed signs of recovery, albeit from a relatively low starting point.
From a technical perspective, silver is experiencing short covering, evidenced by a 3.84% decline in open interest to 16,751, while prices have increased by Rs 4,833 rupees. Support is currently established at Rs 138200, beneath which a decline to Rs 134510 may occur. Conversely, resistance is identified at Rs 143885, and a breach above this level could propel prices toward Rs 145880.