Silver prices experienced a decline of 2.03%, settling at Rs 2,26,772. This downturn was influenced by heightened inflation concerns, which were exacerbated by soaring energy prices in the context of increasing tensions in the Middle East. Elevated oil prices have exacerbated concerns regarding enduring inflation, leading investors to pivot towards the dollar and U.S. Treasuries, consequently exerting pressure on precious metals.
The broader macro environment has become increasingly less favorable. Major central banks, including the Federal Reserve, ECB, BOJ, and BOE, have kept interest rates steady while signaling a more hawkish posture, suggesting that any potential rate cuts could be postponed until inflation demonstrates definitive signs of moderation. Market dynamics are currently shifting expectations for U.S. rate cuts to a later timeframe, while simultaneously incorporating the possibility of rate increases from European central banks within the current year.
This change in perspective has diminished the attractiveness of non-yielding assets such as silver. On the economic front, U.S. labor data exhibited resilience, as initial jobless claims decreased to 205,000, bolstering the perception of a stable economy and lending support to the argument for a tighter policy stance. In the interim, silver holdings in London vaults experienced a reduction of 2.4%, bringing the total to 27,065 tonnes, which suggests a degree of tightening in physical inventories.
From a technical perspective, the market is experiencing long liquidation, as evidenced by a 1.45% decrease in open interest to 6,222, coinciding with a significant decline in prices. Immediate support is identified at Rs 2,20,050, with potential further decline toward Rs 2,13,330. Resistance is established at Rs 2,36,745, and a breach of this level may propel prices toward Rs 2,46,720.