Silver experienced a significant decline of -3.97% yesterday, closing at Rs 156018. This drop was primarily influenced by a widespread market sell-off triggered by hawkish statements from U.S. Federal Reserve officials, which diminished expectations for a rate cut in December. Traders have lowered the likelihood of a December cut to below 50%, down from nearly 65% previously, as Federal Reserve officials expressed skepticism regarding the necessity for additional easing in light of economic resilience and ongoing inflation uncertainties. The resolution of the protracted U.S. government shutdown has resulted in policymakers lacking essential economic data, thereby heightening market apprehension.
In terms of physical assets, silver holdings in London vaults increased to 26,255 tons, reflecting a month-on-month rise of 6.8%, which alleviates the liquidity constraints in the preeminent OTC precious metals market. In October, 1,674 tons were directed into London, contributing to a moderation in short-term borrowing rates, although these rates continue to be historically high. In the interim, Comex inventories experienced a decline of 1,568 tons from the peaks observed in early October, although they continue to be significantly elevated on a year-over-year basis, largely attributable to uncertainties surrounding tariffs.
Investor interest remains robust, as evidenced by an 18% year-to-date increase in silver ETP holdings, translating to a substantial rise of 187 million ounces. This uptick is largely fueled by apprehensions surrounding stagflation, geopolitical tensions, the independence of the Federal Reserve, and the state of U.S. debt. Global silver demand for 2025 is anticipated to decline by 4% year-on-year, reaching 1.12 billion ounces, as industrial demand is forecasted to decrease by 2% in light of prevailing global uncertainties and cost-saving measures.
The market is currently experiencing long liquidation, evidenced by a 2.32% decline in open interest. Support is positioned at Rs 151815, and a decline below this level may lead to a test of Rs 147610. Conversely, resistance is identified at Rs 161780, with the possibility of reaching Rs 167540.