Silver experienced a notable increase of 4.03% to Rs 182,030, driven by constricting global supply dynamics and rising anticipations regarding a potential reduction in US interest rates. The markets are currently reflecting a complete expectation of a 25 basis points reduction in the Federal Reserve’s interest rate, bolstered by weaker labor market indicators and accommodating remarks from Federal Reserve officials. A significant factor propelling the rally has been escalating supply concerns, especially in China.
Inventories at warehouses linked to the Shanghai Futures Exchange have recently fallen to their lowest levels since 2015, while volumes on the Shanghai Gold Exchange have declined to a nine-year low. In October, China exported more than 660 tons of silver, marking the highest monthly volume on record. This substantial outflow to London was aimed at alleviating an acute liquidity squeeze that had driven prices to unprecedented levels. In spite of the recent influx of capital, liquidity within the silver market continues to be constrained.
Reports indicated that silver stored in London vaults increased by 6.8% in October, reaching a total of 26,255 metric tons, with a valuation of $41.3 billion. Significant deliveries from China and the United States contributed to a reduction in short-term borrowing costs, despite the fact that rates continue to be historically high. Meanwhile, approximately 1,568 tons have left Comex warehouses since early October, driven by apprehensions regarding potential US import tariffs following silver’s addition to the US critical minerals list.
In a technical analysis, the market experienced short covering, evidenced by a 9.64% decline in open interest to 14,680, while prices surged to Rs 7,049. Support is established at Rs 177,600, with additional downside risk extending toward Rs 173,165. Resistance is identified at Rs 184,735, and a breakout above this threshold could propel prices toward Rs 187,435.