Silver prices experienced a notable increase of 3.36% to Rs 1,67,663 yesterday, propelled by a significant short squeeze and a contraction in liquidity in London, which compelled traders to actively cover their positions. Lease rates in London surged by more than 30%, markedly increasing rollover expenses for short positions and prompting a rush for physical supply. The situation was further intensified by strong demand from India, which has been actively importing silver amid concerns over potential U.S. tariffs on the metal.
Geopolitical uncertainty regarding a potential meeting between Trump and Xi later this month has also strengthened safe-haven buying, while anticipations of forthcoming U.S. Federal Reserve rate cuts in October and December provided additional support to precious metals. Investment interest in silver has demonstrated resilience, as evidenced by global exchange-traded product inflows totaling 95 million ounces in the first half of 2025. This surge has elevated total holdings to 1.13 billion ounces, which is merely 7% shy of the peak observed in 2021.
In June, global ETP holdings exceeded $40 billion for the first time. Retail investment trends exhibited a divergence, as European demand showed signs of recovery from previously diminished levels, whereas India recorded a robust 7% year-on-year growth in retail silver investment during the first half of the year. The Silver Institute anticipates a reduction in the global silver deficit by 21%, bringing it to 117.6 million ounces this year, attributed to a slight easing in demand alongside improvements in supply.
From a technical perspective, the market is experiencing short covering, evidenced by a 6.43% decline in open interest to 24,014, while prices have surged by Rs 5,457. Silver establishes a support level at Rs 1,64,460 and Rs 1,61,255, while encountering resistance at Rs 1,69,435 and Rs 1,71,205.