Silver experienced a significant decline of 10.11%, closing at Rs 2,36,435, as robust U.S. labor data considerably diminished expectations for imminent rate cuts by the Federal Reserve. The unemployment rate has decreased to 4.3%, highlighting the robustness of the labor market and contributing to an increase in Treasury yields. Expectations for the next rate cut have now been adjusted to July, moving away from the previously anticipated June timeline.
Statements from Federal Reserve officials underscored a prudent approach. Dallas Fed President Lorie Logan underscored that any additional easing would necessitate unequivocal indications of a decline in the labor market. Cleveland Fed President Beth Hammack indicated that rates may be maintained at their current levels for a prolonged duration while policymakers evaluate forthcoming data. In light of the significant price correction, the fundamentals of the physical market continue to exhibit relative tightness.
Silver inventories on the Shanghai Futures Exchange have declined to levels not seen in nearly a decade, with stocks decreasing to approximately 318.5 tonnes as of early February—representing a reduction of over 88% from their peak in 2021. Meanwhile, London vault holdings decreased by 0.3% month-on-month, reaching 27,729 tonnes at the conclusion of January.
From a technical perspective, the market is experiencing long liquidation, as evidenced by the open interest remaining steady at 6,252 lots, even in the face of a significant price drop. Immediate support is identified at Rs 2,26,515, with a breach possibly leading to a test of Rs 2,16,590. On the upside, resistance is positioned at Rs 2,54,570, and a rebound beyond this threshold could aim for Rs 2,72,700.