Silver prices fell by 1.15%, closing at Rs 220,620, as investors gravitated towards riskier assets following softer-than-anticipated U.S. inflation data, which diminished the appeal of safe-haven investments. The latest U.S. Consumer Price Index indicated that headline inflation decreased by 0.4% in June, representing its first monthly decline since the pandemic. Concurrently, core inflation moderated to 2.6%, falling short of market expectations. The data reinforced anticipations that the Federal Reserve might maintain interest rates at their current levels during the July meeting. However, Fed Governor Christopher Waller cautioned that policymakers could still raise rates if inflation remains persistently above the 2% target.
Meanwhile, CME FedWatch data indicates the probability of a September rate hike has increased to around 78%, reflecting continued uncertainty over the U.S. monetary policy outlook. Fundamental developments exhibited a mixed pattern for silver. ANZ anticipates that silver will continue to follow the trajectory of gold prices in the short term; however, it posits that the underlying supply-demand dynamics will progressively strengthen over the medium to long term. London vault holdings increased by 0.6% at the end of May, reaching 27,611 tonnes, which underscores the stability of institutional inventories.
In contrast, India’s silver imports experienced a significant decline following the implementation of stricter government regulations. In May, imports experienced a significant year-on-year decline of 87% in value, amounting to $75.57 million. Concurrently, the volume of imports plummeted by 94%, reaching a mere 33 metric tonnes, marking the lowest level since February 2023. The government has raised import duties on gold and silver to 15% from 6% in an effort to restrict imports of precious metals and alleviate pressure on foreign exchange reserves.
Silver is currently experiencing renewed selling pressure, as evidenced by a 3.94% rise in open interest alongside a decline in prices. This suggests the establishment of new short positions in the market. Immediate support is positioned at Rs 217,925, succeeded by Rs 215,235, whereas resistance is identified at Rs 223,445 and Rs 226,275. A decisive breakout beyond these levels will determine the next directional move.