Silver prices experienced an upward movement in the prior session, concluding at Rs 2,68,285, reflecting a 2.32% increase, driven by heightened tensions in the Middle East that enhanced safe-haven demand. Nonetheless, the increases were somewhat constrained as ongoing inflation worries tempered anticipations for substantial interest rate reductions by the U.S. Federal Reserve. Investors shifted their focus to precious metals following labor market data that fell short of expectations, heightening fears of a possible economic slowdown. In February, the U.S. economy experienced a decline of 92,000 jobs, falling short of anticipated job growth, with the unemployment rate increasing to 4.4%, marginally exceeding projections.
Supplementary economic indicators likewise indicated a decline in momentum. In January, U.S. retail sales experienced a decline of 0.2%, following a stagnant performance in December, which aligns closely with market expectations. Amidst a backdrop of mixed economic indicators, market participants are attentively monitoring the upcoming Federal Reserve policy meeting on March 18, where a consensus suggests that interest rates are likely to stay steady.
The ongoing constraints in physical availability on the supply side are contributing to the upward pressure on silver prices. Inventories on the Shanghai Futures Exchange have decreased to approximately 350 tonnes, marking the lowest point in nearly a decade. Data indicated that exchange stocks fell to 318.5 tonnes in early February, representing a significant decrease of over 88% from the peak levels observed in 2021.
From a technical perspective, the market is experiencing short covering, as open interest has decreased by 2.88% to 6,171 lots, accompanied by a price increase of Rs 6,094. Silver is presently encountering support at Rs 2,62,560, with the subsequent downside target positioned at Rs 2,56,840. On the upside, resistance is observed at Rs 2,72,250, and a sustained move above this level could propel prices toward Rs 2,76,220.