Silver experienced a notable increase of 6.77%, closing at Rs 244,268, as market participants adjusted their positions in anticipation of the Federal Reserve’s January meeting minutes. The signals from policy remain inconclusive. Michael Barr reiterated that rates should remain unchanged until inflation clearly moves toward the 2% target, while Austan Goolsbee indicated that rate cuts could still be considered later this year if price pressures continue to ease.
Market participants are closely monitoring the upcoming U.S. PCE inflation data, as expectations for a rate cut are predominantly focused on June. Safe-haven demand experienced a moderation as a result of diminishing tensions between the US and Iran, coupled with a reduction in trading activity across Asia attributed to the Lunar New Year holiday. In December, U.S. durable goods orders experienced a decline of 1.4%.
However, core orders, which exclude transportation, increased by 0.9%, presenting a mixed economic indicator. On the physical side, the persistence of supply tightness continues to be a significant theme. Silver inventories on the Shanghai Futures Exchange have declined to levels not seen in several years, decreasing by over 88% from their peak in 2021. At the conclusion of January, London vault holdings registered at 27,729 tonnes, reflecting a modest decline compared to the previous month.
From a technical perspective, the market is experiencing short covering, as evidenced by a 1.15% decline in open interest. Support is identified at Rs 235,790 and Rs 227,315, whereas resistance is established at Rs 249,070; a breach above this threshold may propel prices toward Rs 253,875.