Silver prices experienced a significant increase, closing up by 6.43% at Rs 268,970, as the metal reached new record highs in the context of growing apprehensions regarding the autonomy of the U.S. Federal Reserve and heightened geopolitical uncertainties. Demand for safe-haven assets increased in response to reports of a criminal investigation involving Fed Chair Jerome Powell and rising political pressure on the central bank. Additionally, expectations for further U.S. rate cuts bolstered precious metals after December payroll growth fell short of projections.
Increased geopolitical tensions, especially the turmoil in Iran and the potential for wider conflict, have contributed to the growing attractiveness of silver. Fundamentals continue to provide support, as investment demand compensates for the decline in industrial and jewellery consumption. At the conclusion of December, silver holdings in London vaults reached 27,818 tonnes, marking a 2.3% increase from the previous month, indicative of heightened institutional positioning.
HSBC has significantly increased its forecast for silver prices, attributing this adjustment to a depreciating U.S. dollar, slight supply-demand imbalances, and robust inflows into safe-haven assets. However, the bank has also noted that the prevailing price levels exhibit considerable volatility. Tightness in global inventories has contributed to market apprehension, as Chinese stockpiles have declined to their lowest level in a decade following significant exports to London, while liquidity conditions outside China continue to be constrained.
From a technical perspective, the market is experiencing notable short covering, with open interest decreasing by 14.53% while prices increased by Rs 16,245. Silver exhibits immediate support at Rs 262,670, with additional downside anticipated around Rs 256,370. On the upside, resistance is positioned at Rs 273,310, and a decisive move above this level could pave the way toward Rs 277,650.