Silver experienced a significant increase, rising by 3.35% to close at Rs 244,360, coinciding with a decline in U.S. Treasury yields to their lowest point since early December. The action came in response to an inflation report that fell short of expectations, bolstering the belief that the Federal Reserve is poised to initiate rate cuts later this year. In January 2026, the annual inflation rate in the U.S. decreased to 2.4%, falling short of projections, whereas core inflation experienced a month-on-month increase of 0.3%, consistent with anticipated figures.
Despite robust employment figures released earlier this week diminishing the likelihood of an imminent rate cut, market expectations remain for approximately two reductions of 25 basis points by the end of the year. Federal Reserve officials continue to exercise caution. Dallas Fed President Lorie Logan indicated that significant labor market weakness would be necessary before any further easing, whereas Cleveland Fed President Beth Hammack proposed that rates might remain elevated for an extended period.
In the interim, geopolitical developments provided additional support as President Donald Trump signaled advancements in negotiations with Iran. On the physical side, the visibility of supply tightness is increasing. Silver inventories on the Shanghai Futures Exchange have declined to their lowest level since 2015, now standing at approximately 318 tonnes—a decrease of over 88% from their peak in 2021. London vault holdings experienced a slight decline in January.
From a technical perspective, the market is experiencing short covering, as evidenced by a 6.71% decline in open interest. Support is positioned at Rs 239,255, with additional potential decline toward Rs 234,155. Resistance is positioned at Rs 249,120, with a breach above this level potentially aiming for Rs 253,885.