Silver yesterday settled 3.17% higher at Rs 1,61,272, buoyed by soft U.S. economic data that reinforced expectations for a December Federal Reserve rate cut. Weaker retail sales, declining consumer confidence, and deteriorating labor market conditions—evidenced by ADP’s report indicating that private employers are shedding 13,500 jobs per week—have dampened sentiment. The current market assessment indicates an 84% likelihood of a 25 basis points reduction, a significant increase from the 50% probability observed just a week prior. Further sentiment support was derived from reports indicating that Kevin Hassett, recognized for his advocacy of lower rates, is under consideration for the position of Fed chair.
On the supply side, COMEX inventories decreased by 7.6 moz last week to 462 moz, marking the lowest level since March, while LBMA inventories increased to 844 moz as arbitrage opportunities facilitated the movement of metal back to London. The wedding season in India has led to an increase in physical demand, while the uncertainty surrounding potential U.S. tariffs on silver has introduced an additional element of safe-haven support.
The LBMA indicated that silver stored in London vaults increased by 6.8% in October, reaching 26,255 tonnes, thereby alleviating the liquidity constraints that had arisen from previous withdrawals from Comex warehouses. Silver-backed ETP holdings have surged by 18% year-to-date, indicative of heightened investor apprehensions regarding stagflation, fiscal risks in the U.S., geopolitical uncertainties, and the integrity of Federal Reserve independence.
The market experienced new buying activity, as open interest increased by 1.48% to reach 8,485, coinciding with a price rise of Rs 4,951. Support is established at Rs 1,58,550, beneath which Rs 1,55,830 could be examined. Resistance stands at Rs 1,62,945, and a breakout may propel prices towards Rs 1,64,620.