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 of further U.S. rate cuts bolstered precious metals after December payroll growth fell short of forecasts. Increased geopolitical tensions, especially the turmoil in Iran and the potential for wider conflict, have enhanced the 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 safe-haven investment trends.
However, the institution has also noted that the prevailing price levels exhibit considerable volatility. The constriction in global inventories has heightened market apprehension, as Chinese stockpiles have plummeted to their lowest point in ten years following substantial exports to London, while liquidity conditions beyond China continue to be under pressure.
From a technical standpoint, the market is experiencing notable short covering, evidenced by a 14.53% decrease in open interest alongside a price increase of Rs 16,245. Silver exhibits immediate support at Rs 262,670, while additional downside potential is observed 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.