Silver experienced a notable increase of 5.9%, concluding at Rs 274,998, propelled by a resurgence in safe-haven demand in the context of U.S. tariff uncertainties and escalating geopolitical tensions. Markets responded to the policy ambiguity in Washington following the U.S. Supreme Court’s decision to invalidate extensive reciprocal tariffs, subsequently leading the administration to implement a new 10% global tariff, which may increase to 15% for certain nations. The evolving trade landscape has prompted apprehensions regarding the durability of current trade agreements.
Simultaneously, the U.S. producer price data exceeded expectations, increasing by 0.5% month-on-month, while core prices experienced a rise of 0.8%, underscoring ongoing inflationary pressures. Despite a shift towards a more hawkish stance among certain Federal Reserve officials, money markets continue to anticipate a minimum of two rate cuts this year, with the initial cut projected for July.
The fundamentals in the physical market continue to exhibit tightness. Silver inventories on the Shanghai Futures Exchange have decreased to approximately 350 tonnes, the lowest level observed since 2015, representing a significant decline from the peak reached in 2021. By the end of January, London vault holdings experienced a slight decline, reaching 27,729 tonnes.
The rally was primarily driven by short covering, as evidenced by a significant decline in open interest, which fell by 20.86% to 2,785 contracts. Immediate support is identified at Rs 267,400, whereas resistance is positioned at Rs 279,280. A significant breakthrough above this threshold may pave the way toward Rs 283,570.