Silver prices increased by 0.17% to close at Rs 244,316, buoyed by ongoing geopolitical tensions and strong physical demand. However, the gains were limited due to uncertainty surrounding the interest rate outlook. Rising tensions between the United States and Iran, coupled with the precarious ceasefire in the Persian Gulf, persist in heightening inflation worries and maintaining anticipations of stricter monetary policy. This presents constrained upward potential in silver, given that elevated interest rates generally diminish the attractiveness of non-yielding assets. From a macroeconomic standpoint, the mixed data from the US contributed to heightened market uncertainty.
In March, building permits experienced a significant decline of 11.4%, indicating a downturn in the housing sector. Concurrently, the trade deficit expanded to $60.3 billion, which suggests an increase in import demand. Concurrently, market anticipations regarding a Federal Reserve rate increase have escalated notably, with probabilities climbing to approximately 35%, thereby further constraining bullish sentiment in precious metals. On the demand side, China continued to be a significant contributor, with silver imports reaching a historic high of 836 metric tons in March, nearly three times the historical average.
Robust retail investment demand, fueled by elevated gold prices, alongside proactive stockpiling by the photovoltaic sector in anticipation of policy shifts, has underpinned price levels. The heightened domestic premiums in China have stimulated global arbitrage flows, resulting in a contraction of international supply. In the interim, silver holdings in London vaults rose by 1.6% to 27,487 tonnes, reflecting stable inventory levels.
From a technical perspective, the market is experiencing renewed buying interest, as evidenced by a 5.03% increase in open interest to 8,131 lots, alongside a price increase of Rs 421. Immediate support is observed at Rs 242,370, with additional downside potential toward Rs 240,415. On the upside, resistance is positioned at Rs 246,815, and a sustained movement above this threshold could drive prices toward Rs 249,305.