Silver prices rebounded sharply, settling 2.66% higher at Rs 228,563, supported by fresh buying after recent declines. Despite the recovery, sentiment remained influenced by a stronger U.S. dollar and expectations that the U.S. Federal Reserve may continue tightening monetary policy to combat persistent inflation. Rising energy prices linked to Middle East tensions have reduced expectations of any Fed rate cuts this year, while markets are now pricing in nearly a 65% probability of a September rate hike. Investors are closely watching upcoming U.S. nonfarm payrolls data and comments from Fed Chair Kevin Warsh for further guidance on the interest rate outlook.
Meanwhile, Chicago Fed President Austan Goolsbee and New York Fed President John Williams reiterated that inflation remains above the Fed’s 2% target despite some easing in services inflation. Fundamental data reflected mixed trends across the physical silver market. Silver holdings in London vaults increased 0.6% month-on-month to 27,611 tonnes, valued at approximately US$67.3 billion, equivalent to nearly 920,378 silver bars. In contrast, India’s silver imports fell sharply following tighter government restrictions on imports.
May imports declined 87% year-on-year in value to US$75.57 million, while import volumes plunged 94% to just 33 metric tonnes, the lowest level since February 2023. The government has also increased import duties on gold and silver to 15%, aiming to curb precious metals imports and ease pressure on foreign exchange reserves after record silver imports during FY2025/26.
From a technical perspective, silver remains under fresh buying interest, with open interest rising 2.25% to 11,707 contracts alongside the strong price advance. Immediate support is seen at Rs 222,270, followed by Rs 215,980, while resistance is placed at Rs 232,825. A sustained move above this level could extend gains toward Rs 237,090.