Silver prices experienced a notable decline, decreasing by 1.94% to close at Rs 2,48,194, influenced by a robust dollar and ongoing concerns regarding inflation that dampened market sentiment. The dollar index rose to nearly 99.9, bolstered by stronger-than-anticipated inflation figures from the U.S. Producer prices experienced a month-on-month increase of 0.7%, with core PPI rising by 0.5%. Both figures surpassed expectations, bolstering the perspective that inflation continues to exhibit persistence.
Increasing oil prices have exacerbated inflationary pressures following reports of new assaults on Iran’s energy infrastructure. This interplay of persistent inflation and high energy prices has dampened expectations for imminent rate reductions, thereby heightening the opportunity cost associated with holding precious metals such as silver.
On the supply side, indications of a constriction in physical availability are emerging. Silver holdings in London vaults experienced a month-on-month decline of 2.4%, totaling 27,065 tonnes, which suggests a gradual reduction in global inventories. However, this has not been sufficient to counterbalance the macroeconomic pressures stemming from currency strength and interest rate expectations.
From a technical perspective, the market is experiencing new selling pressure, as open interest increased by 2.23% to 5,975 lots, while prices fell significantly by Rs 4,919. Immediate support is identified at Rs 2,42,365, with potential further decline toward Rs 2,36,540. Resistance is established at Rs 2,54,455, and a breach of this threshold may propel prices toward Rs 2,60,720.