Silver prices concluded the trading session with a 1.26% increase, reaching Rs 222,138. This rise was bolstered by safe-haven demand, as investors remained vigilant regarding the intensifying geopolitical tensions in the Middle East and their possible repercussions on energy prices and global inflation. The recent military action by the U.S. targeting Iranian military infrastructure has intensified worries regarding potential disruptions in the Strait of Hormuz, thereby providing robust support for precious metals. However, gains remained constrained by anticipations that the U.S. Federal Reserve may sustain a restrictive monetary policy for an extended period.
Recent data indicated that U.S. jobless claims have decreased to their lowest level since September 1969, underscoring the persistent strength of the labour market and bolstering expectations for at least one interest rate increase later this year. Meanwhile, U.S. building permits experienced a decline of 2.6% in June, indicating a degree of moderation within the housing sector. Several Federal Reserve officials, including Cleveland Fed President Beth Hammack, Dallas Fed President Lorie Logan, and Vice Chair Philip Jefferson, reiterated that additional policy tightening may be required if inflation remains persistent.
On the physical market front, India’s silver imports experienced a dramatic decline of 94% year-on-year in volume terms, totalling merely 33 metric tonnes in May. This figure marks the lowest level since February 2023, a consequence of stricter import restrictions and elevated import duties intended to alleviate pressure on foreign exchange reserves. Meanwhile, silver holdings in London vaults rose by 1.7% to 28,082 tonnes at the end of June, indicating robust global inventories. Despite weaker Indian imports, ANZ anticipates a gradual improvement in silver fundamentals over the medium to long term, bolstered by its close relationship with gold.
Silver is currently experiencing short covering, as evidenced by a 1.11% decline in open interest alongside an increase in prices. Immediate support is observed at Rs 218,690, succeeded by Rs 215,245. On the upside, resistance is positioned at Rs 224,215, and a sustained move above this level could pave the way towards Rs 226,295, thereby sustaining a constructive near-term outlook.