Silver prices experienced a notable drop of 6.14%, closing at Rs 248,537. This decline was influenced by a stronger US dollar and solid US economic data, which bolstered expectations for prolonged higher interest rates. The dollar index rose above 99.60 following the addition of 172,000 jobs in May by the US economy, which notably surpassed market expectations of 85,000 jobs, with the unemployment rate holding steady at 4.3%. The robust labour market data diminished expectations for imminent monetary easing, significantly impacting precious metals.
Meanwhile, developments in the Middle East presented a mixed picture, as US President Donald Trump suggested that peace negotiations were nearing a final stage, while Iranian officials maintained a sceptical stance regarding any significant progress in the discussions. Fundamentally, silver remains bolstered by robust industrial and investment demand, especially from China. China’s silver imports reached an unprecedented 836 metric tonnes in March, nearly tripling the ten-year average for the month. This surge was fuelled by robust retail investment demand and proactive stockpiling by the photovoltaic sector in anticipation of upcoming changes in export tax incentives.
At the conclusion of May, silver inventories in London vaults rose to 27,611 tonnes, reflecting a 0.6% increase from the previous month. India has tightened import regulations by categorising silver grains, powders, and most semi-manufactured silver products as restricted, necessitating import authorisation. The initiative seeks to address unprecedented import levels and alleviate strain on the national currency, which may lead to a reduction in local availability and bolster domestic price premiums.
Technically, the market is experiencing new selling pressure as open interest rose by 4.73% to 12,315 contracts while prices fell sharply, suggesting a new short build-up. Silver has immediate support at Rs 243,250, with further weakness potentially extending towards Rs 237,965. On the upside, resistance is identified at Rs 257,855, and a sustained move above this level may propel prices towards Rs 267,175.