Silver prices declined by 0.71% to close at Rs 2,25,167, although the market was able to recover some of its initial losses following reports that President Donald Trump delayed possible military action against Iran for five days. Although this provided a momentary reprieve, the overarching sentiment continues to be subdued, with silver trading close to its lowest points since December.
The recent sharp correction—over 15% last week—has been primarily influenced by escalating oil prices and increasing inflation concerns, leading to a recalibration of expectations regarding extended monetary tightening. Major central banks, including the Federal Reserve, ECB, BoE, and BoJ, have adopted a prudent approach, indicating that interest rates may remain elevated for an extended period. Market participants are recalibrating their forecasts for Federal Reserve rate reductions, now anticipating such moves to occur in 2027.
Concurrently, there is an expectation of additional rate increases in Europe, which diminishes the attractiveness of non-yielding assets such as silver. On the macro front, the stronger-than-expected US labor data, highlighted by a decline in jobless claims to 205,000, has further solidified the hawkish outlook. In the interim, silver reserves in London vaults experienced a reduction of 2.4%, bringing the total to 27,065 tonnes, which suggests a contraction in physical supply.
From a technical perspective, the market is experiencing long liquidation, as evidenced by a 2.3% decrease in open interest to 6,082 concurrent with the price drop. Silver is currently establishing a support level at Rs 2,06,770, with potential further decline towards Rs 1,88,380. On the upside, resistance is observed at Rs 2,36,425, and a movement above this threshold could drive prices toward Rs 2,47,690.