Silver prices experienced a decline of 0.31%, settling at Rs 266,163. This movement can be attributed to the resurgence of geopolitical uncertainty related to US-Iran negotiations, coupled with anticipations of a sustained higher interest rate environment in the United States. Market sentiment exhibited a degree of caution following reports indicating that Iran had suspended communications with Washington in light of military developments in Lebanon and threats to close the Strait of Hormuz. While both nations exchanged proposals aimed at extending the ceasefire and reopening the strategic waterway, uncertainty over a final agreement continued to sustain volatility across commodity markets.
President Donald Trump reiterated that any agreement must encompass the reopening of the Strait of Hormuz, the surrender of enriched uranium, and a total cessation of Iran’s nuclear program. Silver also encountered pressure from heightened inflation expectations following the recent US PCE inflation data, which bolstered the likelihood that the Federal Reserve may sustain a restrictive monetary policy for an extended period. Several Fed officials underscored the ongoing risks associated with inflation, with policymakers suggesting that further tightening could be necessary should price pressures continue to be high. Higher interest rates typically diminish the attractiveness of non-yielding assets like precious metals.
Fundamentally, silver continues to receive support from robust physical demand in China. In March, silver imports reached an unprecedented 836 metric tonnes, nearly tripling the historical average for that month. This surge was propelled by heightened retail investment demand and significant stockpiling activities within the photovoltaic sector in anticipation of forthcoming policy adjustments. Meanwhile, silver inventories in London vaults experienced a modest decline, reaching 27,454 tonnes at the conclusion of April. In India, the government has implemented restrictions on the importation of silver bars and semi-manufactured silver products as a measure to mitigate increasing import levels and alleviate pressure on the rupee.
The action is anticipated to constrain domestic supplies while possibly diminishing total import demand. Technically, the market is experiencing new selling pressure, evidenced by a 2.17% rise in open interest to 10,339 contracts, coinciding with a decline in prices. Silver has immediate support at Rs 262,615, with a breach of this level likely to test Rs 259,065. On the upside, resistance is observed at Rs 269,200, and a sustained move above this level could potentially pave the way toward Rs 272,235.