Silver prices increased by 0.18%, closing at Rs 216,403, bolstered by short covering amid rising geopolitical tensions in the Middle East, which enhanced safe-haven demand. The ongoing conflict between the United States and Iran has led to an uptick in energy prices, which in turn has heightened inflation concerns and bolstered expectations that the Federal Reserve may sustain a restrictive monetary policy for an extended duration. Market sentiment continued to center on geopolitical developments as Iran initiated new strikes on U.S. facilities in response to ongoing U.S. military operations that have affected shipping routes through the Strait of Hormuz.
Elevated crude oil prices have underscored inflationary pressures, as Federal Reserve officials continue to adopt a hawkish posture. Dallas Fed President Lorie Logan expressed support for an additional interest rate increase, while Fed Vice Chair Philip Jefferson suggested that a tighter policy would be warranted should inflation not show signs of improvement. Markets are currently assigning a probability of nearly 50% to a rate increase in September. Meanwhile, U.S. inflation data indicated a decline in both consumer and producer prices during June, although there was an unexpected rise in import prices. Silver fundamentals presented a mixed picture.
ANZ anticipates that silver will continue to be closely correlated with gold in the short term; however, it posits that enhancing industrial demand will offer more robust support in the medium to long term. London vault holdings rose by 1.7% in June, reaching 28,082 tonnes, indicative of robust institutional inventories. In contrast, India’s silver imports experienced a significant decline of 87% in value and 94% in volume during May, a consequence of stricter import restrictions and elevated import duties. These measures were implemented with the objective of curbing precious metal imports and alleviating pressure on foreign exchange reserves.
From a technical perspective, silver experienced new buying activity, as evidenced by a 0.76% increase in open interest alongside rising prices. Immediate support is positioned at Rs 214,375, succeeded by Rs 212,350. Resistance is observed at Rs 217,830, and a significant breakout above this threshold may lead to further gains towards Rs 219,260, suggesting a positive near-term technical perspective.