Silver prices experienced a notable increase of 1.79%, closing at Rs 276,716. This rise was bolstered by a decline in the US dollar and lower crude oil prices, fuelled by optimism regarding possible advancements in US-Iran peace talks. However, market sentiment remained cautious following US President Donald Trump’s assertion that his administration would not hasten into a deal with Iran, moderating expectations of an immediate breakthrough. Additionally, Richmond Fed President Thomas Barkin asserted that monetary policy is suitably calibrated to address economic shocks, while highlighting apprehensions regarding inflation and the risks to economic growth.
Market participants are currently assigning a 58% likelihood to the occurrence of at least one 25 basis-point increase in Federal Reserve interest rates by December, as indicated by CME FedWatch data. Meanwhile, the University of Michigan Consumer Sentiment Index declined to a historic low of 44.8 in May, indicating ongoing inflation worries associated with elevated fuel prices and supply chain interruptions in the Strait of Hormuz. Fundamentally, silver maintained significant backing due to strong demand from China and constricting global supply conditions.
China’s silver imports reached an unprecedented 836 metric tonnes in March, nearly tripling the historical average. This surge was propelled by robust retail investment demand and significant stockpiling by photovoltaic manufacturers in anticipation of changes to export tax rebates. In India, the government has enacted immediate restrictions on the importation of silver bars and semi-manufactured silver products, which together represent over 90% of the country’s annual silver imports. India’s silver imports reached a historic $12 billion in FY2025/26, with April imports surging 157% compared to the previous year.
Increasing ETF inflows and demand driven by investments have further bolstered the overall outlook for the silver market. Technically, the market experienced short covering, evidenced by a 3.28% decline in open interest to 9,175 lots, while prices increased by Rs 4,870. Silver is presently encountering support at Rs 275,490, with additional weakness possibly probing the Rs 274,260 levels. On the upside, resistance is observed at Rs 277,675, and a sustained move above this level may catalyse additional gains toward Rs 278,630.