After the U.S. Federal Reserve held interest rates but indicated growing support for a rate hike later this year, silver prices saw a significant reversal of 5.65% to end at Rs 237,572, reflecting weakness throughout the precious metals complex. Fed Chairman Kevin Warsh underlined the central bank’s dedication to re-establishing price stability in the face of ongoing inflationary pressures as the FOMC unanimously maintained the benchmark rate at 3.5%–3.75%. The market’s expectations for a December rate hike increased to 83.1% after the policy announcement, greatly diminishing the allure of non-yielding assets like precious metals.
Reports that the United States and Iran are anticipated to sign a memorandum of understanding aimed at resolving the crisis and guaranteeing safe economic transit through the Strait of Hormuz eased sentiment on the geopolitical front.The need for safe havens decreased as global risk decreased, which increased pressure on silver prices. Essentially, China’s demand for silver continued to be very high. Due to strong retail investment demand and active solar sector stockpiling ahead of tax policy changes, March silver imports reached a record 836 metric tonnes, almost three times the historical seasonal average.
Significant inflows from international markets were stimulated by high domestic premiums. In the meantime, London vault stocks reached 27,611 tonnes, a 0.6% monthly rise. India’s imports of silver, on the other hand, plummeted in May, dropping 94% in volume and 87% in value year over year to just 33 tonnes, the lowest level since February 2023. In order to limit imports of precious metals and safeguard foreign exchange reserves, the government enacted stricter import regulations and increased import taxes.
Technically, open interest increased 7.82% coupled with a sharp price decrease, indicating an aggressive short build-up, and silver is still under new selling pressure. Rs 233,860 is the immediate support, and a break below is probably going to test Rs 230,140. A sustained move above the resistance level of Rs 244,650 could open the door to Rs 251,720.