Silver prices concluded the trading session with an increase of 0.48%, reaching Rs 234,310. This uptick was bolstered by a reduction in geopolitical tensions and a drop in crude oil prices. Market sentiment improved following reports that the United States and Iran had reached an agreement on a framework designed to achieve a final peace accord within the next 60 days. The development alleviated apprehensions regarding supply disruptions in the Middle East, especially in light of recent tensions involving Lebanon and Iran’s assertions concerning the Strait of Hormuz. Despite these concerns, crude shipments through the strategic waterway persisted without interruption, as major Gulf producers geared up to increase output levels.
Investors maintained their attention on the imminent publication of the U.S. Personal Consumption Expenditures Price Index, which is regarded as the Federal Reserve’s favoured measure of inflation. Despite the Federal Reserve’s decision to hold interest rates steady last week, the policymakers conveyed a hawkish stance, with nine out of nineteen officials anticipating at least one rate increase within the year. Concurrently, markets are progressively factoring in the likelihood of a potential hike as soon as September. Fundamental data indicated a divergence in trends within the silver market. At the conclusion of May, silver holdings in London vaults experienced a month-on-month increase of 0.6%, reaching a total of 27,611 tonnes. This figure is roughly equivalent to 920,378 silver bars.
Meanwhile, India’s silver imports experienced a significant decline following the government’s implementation of stricter import restrictions and an increase in import duties on precious metals from 6% to 15%. Imports experienced a significant decline of 87% in value terms year-on-year, totalling $75.57 million, while in volume terms, there was a staggering drop of 94%, resulting in merely 33 metric tonnes. This marks the lowest level recorded since February 2023. The measures were implemented to restrict imports of precious metals and alleviate the strain on foreign exchange reserves.
Technically, the market is experiencing short covering, as evidenced by a decline in open interest of 8.42% to 9,864 contracts, coinciding with an upward movement in prices. Silver exhibits immediate support at Rs 232,565, with subsequent support at Rs 230,825. Resistance is identified at Rs 237,375, and a sustained movement above this threshold may initiate additional upward momentum toward Rs 240,445.