Silver prices concluded the trading session with a 0.79% increase, reaching Rs 221,404. This uptick was bolstered by a depreciating U.S. dollar and falling Treasury yields, following the release of the latest U.S. PCE inflation data, which largely aligned with market forecasts. Despite inflation continuing to exceed the Federal Reserve’s 2% target, the report alleviated worries regarding a more pronounced increase in price pressures, thereby enhancing sentiment within the precious metals market. Additionally, crude oil prices have continued to decline to levels observed prior to the Iran conflict, alleviating inflationary concerns and providing additional support to silver.
Market expectations for U.S. monetary policy are centred on a potential rate hike in September, with traders currently attributing a 92% probability to this outcome. Meanwhile, U.S. economic data presented a mixed picture, as the goods trade deficit widened sharply to 105.8 billion dollars in May, the largest in over a year, driven by stronger imports despite higher tariffs. Wholesale inventories also increased 0.3% during the month, marking the fourth consecutive monthly rise and indicating stable business stocking activity.
Fundamental developments in the physical silver market continued to hold considerable importance. Silver holdings in London vaults increased by 0.6% month-on-month, reaching a total of 27,611 tonnes, which is roughly equivalent to 920,378 silver bars. In contrast, India’s silver imports experienced a significant decline of 87% in value and 94% in volume compared to the previous year, reaching the lowest level since February 2023. This downturn follows the government’s implementation of stricter import restrictions and an increase in import duties to 15%.
These measures were implemented to restrict imports of precious metals and alleviate the strain on foreign exchange reserves after unprecedented silver imports in the prior financial year. From a technical perspective, the market is experiencing short covering, as evidenced by a significant decline in open interest of 33.72% alongside an increase in prices. Silver has immediate support at Rs 219,675, followed by Rs 217,940, while resistance is observed at Rs 223,470. A sustained move above this level could extend gains towards Rs 225,530, maintaining a cautiously positive near-term outlook.