Silver declined by 1.18%, closing at Rs 2,41,393, influenced by a robust U.S. dollar and solid economic indicators that dampened market sentiment. Statements from Federal Reserve officials underscored a prudent approach. Governor Michael Barr suggested that rates are likely to stay unchanged until there is more definitive evidence of progress regarding inflation. Simultaneously, Chicago Fed President Austan Goolsbee indicated the possibility of rate cuts later this year should inflationary pressures persist in diminishing.
The Federal Reserve maintained its interest rates at 3.5%–3.75% in January following three reductions in the previous year, with policymakers seemingly split between the objectives of curbing inflation and fostering economic growth. Despite a modest reduction in expectations among traders, the markets continue to foresee two rate cuts prior to the year’s conclusion. The economic data contributed to the already complex landscape. In December, U.S. durable goods orders experienced a decline of 1.4%.
However, core orders, which exclude transportation, demonstrated resilience by increasing by 0.9%. On the physical side, the dynamics of silver supply continue to exhibit tightness. Inventories on the Shanghai Futures Exchange have decreased to levels approaching decade lows, approximately 318–350 tonnes, signifying a substantial decline from their peak in 2021. In January, London vault holdings experienced a slight decline of 0.3%, totaling 27,729 tonnes.
From a technical perspective, the market is experiencing renewed selling pressure, as evidenced by a 3.74% increase in open interest, which suggests the establishment of new short positions. Immediate support is identified at Rs 2,38,075 and Rs 2,34,750, whereas resistance is positioned at Rs 2,46,660; a breach above this level may propel prices towards Rs 2,51,920.