Silver prices fell by 1.85%, closing at Rs 233,185, influenced by a stronger U.S. dollar and increasing expectations of tighter monetary policy. The dollar appreciated to a one-year peak following the Federal Reserve’s decision to keep interest rates steady while upholding a hawkish stance. Updated projections indicated that nine of the Fed’s nineteen policymakers anticipate at least one rate hike later this year, whereas markets presently attribute approximately a 70% likelihood to a September increase. Fed Chair Kevin Warsh reiterated the central bank’s commitment to restoring inflation to its 2% target, thereby reinforcing expectations of elevated interest rates and diminishing the allure of precious metals.
Geopolitical developments have also influenced sentiment, following Switzerland’s announcement that the planned U.S.-Iran negotiations would not occur. Meanwhile, ongoing clashes between Israel and Hezbollah persist, maintaining elevated regional tensions. Despite the recent price decline, underlying physical demand exhibits a mixed picture across key markets. China’s silver imports reached an unprecedented 836 metric tonnes in March, nearly tripling the ten-year average. This surge was driven by robust retail investment demand and proactive stockpiling by the photovoltaic sector in anticipation of forthcoming alterations to export tax rebate policies.
Elevated domestic silver prices in China have prompted substantial inflows driven by arbitrage from global markets. In contrast, India’s silver imports experienced a significant decline of 87% year-on-year in May, reaching their lowest level in over three years. This downturn followed the government’s implementation of stricter import restrictions and an increase in import duties on precious metals, which rose from 6% to 15%. London vault holdings increased by 0.6% month-on-month to 27,611 tonnes, reflecting ample global inventories.
Technically, the market is experiencing long liquidation, as open interest has decreased by 8.44% to 10,695 contracts, coinciding with a significant decline in prices. Silver has immediate support at Rs 229,075, with further weakness potentially extending toward Rs 224,960. Resistance is identified at Rs 236,390, and a persistent advance beyond this threshold may pave the way for a rebound toward Rs 239,590.