Silver experienced a decline of 2.36% yesterday, closing at Rs 270119, as ongoing inflation worries and the anticipation of elevated U.S. interest rates significantly impacted the sentiment surrounding precious metals. Markets exhibited a degree of caution following US President Donald Trump’s suggestion of potential advancements in a peace agreement with Iran, while investors maintained skepticism regarding the proximity of a resolution to the Middle East conflict. In light of the recent escalation of geopolitical tensions, the increase in crude oil prices has heightened inflationary concerns on a global scale, reinforcing the anticipation that central banks, especially the Federal Reserve, may sustain a more stringent monetary policy approach for an extended period.
Robust US inflation figures have diminished anticipations for Federal Reserve rate reductions in 2026 and reignited discussions regarding a potential rate increase before the end of the year. Market participants are currently anticipating the forthcoming FOMC minutes and preliminary US PMI data to gain further insights into economic conditions and the trajectory of monetary policy. The fundamentals of silver exhibit a mixed outlook, even in light of the recent correction. UBS has revised its full-year silver investment demand forecast downward to 300 million ounces, a significant decrease from the previous estimate of over 400 million ounces. Additionally, the firm has markedly adjusted its projection for the global silver deficit, now estimating it to be approximately 60–70 million ounces, down from nearly 300 million ounces previously.
Nonetheless, the physical demand originating from China persisted at remarkably high levels. In March, China imported approximately 836 metric tons of silver, a figure that is nearly threefold the historical average for that month. This surge is attributed to robust retail investment demand and stockpiling activities from the photovoltaic sector in anticipation of forthcoming tax rebate adjustments. Elevated domestic silver premiums in China continue to stimulate global arbitrage flows into the nation. In India, authorities have enacted new restrictions on silver imports to manage increasing shipments and alleviate pressure on the rupee. The restrictions encompass silver bars and semi-manufactured forms, which represented more than 90% of total imports in the previous year.
Notwithstanding these measures, the demand for investment and inflows into silver ETFs persist in demonstrating considerable strength. From a technical perspective, the market is experiencing renewed selling pressure, evidenced by a 5.09% rise in open interest, which has settled at 9101, alongside a price decline of Rs 6532. Silver is currently finding support at Rs 265145; should prices fall below this level, they may approach Rs 260170. Conversely, resistance is identified at Rs 275880, with a potential upward movement likely to challenge Rs 281640.