Silver prices experienced a notable decline of 2.81%, closing at Rs 243,895, influenced by widespread weakness in the market due to escalating geopolitical tensions and ongoing inflation worries. The recent developments in the Middle East, especially concerning the Strait of Hormuz, have led to an increase in energy prices, heightening concerns about sustained inflationary pressures. This has bolstered expectations that significant central banks might uphold a restrictive monetary policy for a prolonged duration, consequently diminishing the attractiveness of non-yielding assets such as silver.
From a macro perspective, the US Federal Reserve maintained interest rates at 3.50%–3.75%. However, the policy decision experienced significant dissent, highlighting underlying uncertainty. Robust economic indicators from the US, coupled with increasing inflation, have solidified the outlook that interest rates may stay high into the following year. Nonetheless, the likelihood of experiencing at least one rate cut in 2026 has seen a slight uptick, indicating a degree of divergence in market expectations. Other significant central banks, such as the European Central Bank and the Bank of England, also upheld the current stance, reflecting a global trend of caution.
On the demand side, China has positioned itself as a pivotal force, with silver imports reaching an unprecedented 836 metric tons in March, markedly exceeding historical averages. The recent surge can be attributed to robust retail investment interest acting as an alternative to gold, coupled with significant stockpiling by the photovoltaic industry in anticipation of forthcoming policy adjustments. Increased domestic premiums in China have further stimulated global arbitrage flows. In the meantime, silver holdings in London vaults rose by 1.6% to 27,487 tonnes, reflecting stable supply conditions.
The market is currently experiencing new selling pressure, as indicated by a 9.43% increase in open interest to 7,722 lots, alongside a price decline of Rs 7,042. Immediate support is identified at Rs 239,600, with potential further decline toward Rs 235,300. On the upside, resistance is positioned at Rs 249,715, and a breakout above this level may drive prices toward Rs 255,530.