Silver prices experienced a notable decline, closing down by 2.91% at Rs 243,324, as market participants adjusted their positions in anticipation of the forthcoming annual commodity index rebalancing, which is projected to initiate significant selling in the futures market. Silver is notably vulnerable, with projections suggesting that approximately $6.8 billion in silver futures—about 12% of COMEX open interest—may be subject to liquidation during the rebalancing process.
Additional pressure arose from a stronger U.S. dollar, while the mixed U.S. economic data provided minimal clarity regarding the Federal Reserve’s policy trajectory, despite markets persistently pricing in rate cuts later in the year. In the face of the recent correction, silver remains positioned near record highs, supported by constrained physical supply and ongoing investment enthusiasm. Geopolitical uncertainties, such as the situation in Venezuela and escalating tensions in East Asia, are sustaining the persistent demand for safe-haven assets.
Supply-side constraints persist, as Chinese silver inventories have declined to their lowest levels in almost a decade due to substantial exports, while liquidity conditions beyond China continue to be constrained despite an increase in London vault holdings. HSBC has significantly increased its medium-term silver price forecast, attributing this adjustment to the momentum of gold and slight structural supply-demand imbalances, while also warning that prices may experience considerable volatility.
From a technical perspective, the market is experiencing renewed selling pressure, evidenced by a 1.08% increase in open interest alongside a decline in prices of Rs 7,281. Silver demonstrates support at Rs 235,610, with a breach beneath this level indicating potential downside movement toward Rs 227,905. Resistance is identified at Rs 251,455, with a potential upward movement that may challenge Rs 259,595.