Silver prices declined by 0.45% to Rs 1,55,312, influenced by waning expectations regarding an imminent rate cut by the U.S. Federal Reserve. The likelihood of a 25 basis points reduction in December has decreased to 46%, a significant decline from the 88% probability observed just a month prior. Market participants are currently anticipating the U.S. September jobs report and revised economic release timelines for additional guidance.
The U.S. Department of Interior’s decision to include silver in its “critical minerals” list underscores its strategic importance, potentially setting the stage for trade restrictions under Section 232, akin to recent measures taken regarding copper. In the physical market, liquidity conditions exhibited a modest improvement as London vault silver holdings increased by 6.8% to 26,255 tonnes, supported by significant inflows from the U.S. and China. This alleviated the acute liquidity crunch observed in early October, although borrowing rates continue to be historically high. In the interim, 1,568 tonnes of silver have exited Comex warehouses since the beginning of October, even as inventories remain elevated compared to the previous year amidst ongoing tariff uncertainties.
Investment interest continues to exhibit robust strength. Holdings in silver-backed exchange-traded products (ETPs) have experienced an 18% increase year-to-date, amounting to an additional 187 million ounces. This rise is largely attributed to apprehensions regarding stagflation, the sustainability of U.S. debt, the independence of the Federal Reserve, and ongoing geopolitical tensions.
Global silver demand in 2025 is anticipated to decrease by 4% to 1.12 billion ounces, with reductions expected in the industrial, jewelry, and investment sectors. The market is currently experiencing long liquidation, as evidenced by a 2.45% decline in open interest, which now stands at 12,867. Support stands at Rs 1,53,520, with subsequent support at Rs 1,51,725. Resistance is identified at Rs 1,56,900, and a breakout could propel prices towards Rs 1,58,485.