Silver prices experienced a notable increase, closing at Rs 2,39,787, reflecting a rise of 7.15%. This movement was largely influenced by anticipations of interest rate reductions in the United States and an uptick in demand for safe-haven assets. Markets are progressively factoring in two Federal Reserve rate cuts next year, as varied economic signals bolster the argument for policy relaxation. Despite the US third-quarter GDP expanding at a robust 4.3% annualized pace, the decline in consumer confidence observed in December, coupled with stagnant factory output in November, has strengthened the anticipation for a more accommodative monetary policy in the near future.
Geopolitical tensions have bolstered sentiment following the US’s decision to impose a blockade on sanctioned Venezuelan oil tankers, resulting in an increase in risk premiums throughout commodity markets. Year-to-date, silver has experienced a remarkable increase of nearly 149%, driven by a fundamental supply deficit, robust industrial demand, and its classification as a critical mineral in the United States.
Supply-side concerns have heightened as Chinese silver stockpiles have fallen to their lowest level in a decade. Inventories at Shanghai Futures Exchange warehouses have declined to their lowest level since 2015, while volumes at the Shanghai Gold Exchange have reached a more than nine-year low, coinciding with record Chinese exports surpassing 660 tonnes in October. While shipments to London have alleviated some pressure, liquidity outside China continues to be constrained, as high borrowing costs endure in the London market.
From a technical perspective, the market is experiencing short covering, evidenced by a 3.95% decline in open interest to 12,089, while prices have increased by Rs 15,997. Silver is currently positioned with support at Rs 2,28,770, while additional downside risks are observed near Rs 2,17,760. Resistance is positioned at Rs 2,46,395, and a sustained advance beyond this threshold may pave the way toward Rs 2,53,010.