Silver prices experienced a significant decline of 3.36%, concluding at Rs 219,375. This drop can be attributed to the intensifying geopolitical tensions in the Middle East, which have heightened inflation concerns and bolstered expectations for a more stringent U.S. monetary policy. Rising crude oil prices, propelled by concerns over extended disruptions to Gulf energy supplies due to ongoing U.S. strikes on Iran and subsequent retaliatory measures, have heightened market anticipations that the Federal Reserve might maintain elevated interest rates for an extended period.
Money markets currently reflect an approximate 78% likelihood of a Federal Reserve rate increase in September. This sentiment is echoed by several officials from the Federal Reserve, including Beth Hammack, Lorie Logan, Philip Jefferson, and Chair Kevin Warsh, who have consistently adopted a hawkish perspective, underscoring the importance of managing inflation even in light of the recent easing in U.S. consumer and producer price indices. On the fundamental side, ANZ anticipates that silver will continue to be closely correlated with gold in the short term, although enhancing supply-demand dynamics may offer support in the medium to long term.
London vault holdings rose by 1.7% month-on-month, reaching 28,082 tonnes, with a valuation of around $53.1 billion, indicating robust global inventories. In India, silver imports experienced a significant decline of 87% year-on-year in May, amounting to $75.57 million. Concurrently, import volumes fell by 94%, reaching a mere 33 metric tonnes, marking the lowest level since February 2023. The sharp decline ensued after the government’s decision to tighten import restrictions on nearly all forms of silver and to increase import duties from 6% to 15%. This move aims to curtail imports of precious metals and alleviate pressure on foreign exchange reserves.
Technically, silver continues to experience fresh selling pressure, as evidenced by a 1.37% increase in open interest, which suggests the establishment of new short positions. Immediate support is observed at Rs 216,280, with a breach below this level likely to prolong losses toward Rs 213,190. On the upside, resistance is positioned at Rs 224,580, and sustained strength above this threshold could initiate a recovery toward Rs 229,790.