Silver prices experienced a decline of 0.54%, settling at Rs 250,105, as investors took a cautious approach in anticipation of the U.S. Federal Reserve’s monetary policy decision and sought additional clarity regarding the proposed U.S.-Iran peace agreement. Despite a decline in prices, the downward pressure was constrained as anticipations surrounding the reopening of the Strait of Hormuz alleviated fears of an energy-induced inflation crisis, thereby diminishing the probability of stringent monetary policy adjustments. The agreement is anticipated to be officially executed later this week, with U.S. authorities signalling that standard shipping operations through the strategic waterway will recommence.
Recent U.S. economic data presented a mixed picture. Export prices rose by 1.3% in May, marginally surpassing forecasts, whereas housing starts fell sharply by 15.4% to an annualised rate of 1.177 million units, marking the lowest level since May 2020. Building permits also declined 0.7% to 1.413 million units, indicating softer momentum in the housing sector and reinforcing expectations that the Federal Reserve may remain cautious regarding future rate increases. Fundamental demand indicators for silver continue to exhibit supportive trends. China’s silver imports surged to a record 836 metric tonnes in March, nearly three times the historical average for the month.
Robust retail investment demand, propelled by high gold prices, along with proactive stockpiling by photovoltaic manufacturers in anticipation of tax policy changes, has markedly increased imports. Increased domestic premiums have also stimulated global shipments to China. In contrast, India’s silver imports experienced a significant decline of 87% year-on-year in May, reaching the lowest level in over three years. This downturn can be attributed to the implementation of stricter import regulations and increased duties on precious metals.
Technically, the market is experiencing long liquidation, as evidenced by a 2.37% decline in open interest alongside a decrease in prices. Silver has immediate support at Rs 246,800, with further downside support at Rs 243,495. On the upside, resistance is observed at Rs 253,155, and a sustained breakout above this level may result in a test of Rs 256,205.