Silver prices experienced a notable decrease of 3.19%, concluding at Rs 238,528 as investors adopted a cautious stance in anticipation of significant U.S. inflation data due this week. Market participants expect U.S. inflation to reach 4.2% in May, marking the highest level in nearly three years, primarily influenced by high energy prices. Meanwhile, optimism surrounding a potential ceasefire in the Middle East diminished the demand for safe-haven assets following U.S. President Donald Trump’s assertion that negotiations were advancing toward an immediate cessation of hostilities. Economic data from the United States continued to bolster the case for a stronger dollar.
The U.S. trade deficit contracted to $55.9 billion in April, exceeding forecasts, while ADP employment data indicated that private sector employers contributed an average of 29,000 jobs per week in the four weeks concluding May 23. Despite a third consecutive week of easing job growth, the overall labour market conditions remain robust, and recent payroll data has bolstered expectations that the Federal Reserve may implement an interest rate hike by the end of the year. Markets currently assign approximately a 70% likelihood of a rate increase in December, as investors attentively observe forthcoming CPI and PPI data for additional insights into policy direction. Fundamentally, China maintained a remarkably robust demand for silver.
In March, silver imports reached an unprecedented 836 metric tonnes, nearly tripling the historical average. This surge can be attributed to heightened retail investment demand and significant stockpiling efforts by the photovoltaic sector. In contrast, India has implemented restrictions on the importation of silver bars and semi-manufactured silver products, a strategic decision intended to diminish import volumes and alleviate pressure on the rupee. The restrictions may constrain domestic supplies and elevate local premiums, while also potentially dampening global demand. Furthermore, silver holdings in London vaults experienced an increase of 0.6% in May, reaching a total of 27,611 tonnes.
Silver is currently experiencing renewed selling pressure, evidenced by a 1.09% rise in open interest to 11,910 lots, which suggests the establishment of new short positions. Immediate support is observed at Rs 233,710, with additional downside potential extending towards Rs 228,895. Resistance is positioned at Rs 246,130, and a sustained movement above this threshold may pave the way for a recovery towards Rs 253,735.