Silver prices experienced a decline of 2.41%, settling at Rs 215,840. This downturn was influenced by a stronger U.S. dollar and a prevailing cautious sentiment among investors in anticipation of the Federal Reserve’s policy decision. The dollar held steady near a four-week high as markets assessed a 36% likelihood of a rate hike this week, while the anticipation for a September increase lingered around 80%. Elevated expectations regarding interest rates persist in diminishing the attractiveness of non-yielding assets, including precious metals. Safe-haven demand also weakened following the emergence of optimism regarding potential advancements in U.S.-Iran negotiations, although geopolitical risks continue to be elevated.
Several Federal Reserve officials reinforced the argument for tighter monetary policy, emphasising that persistent inflation could necessitate additional rate hikes despite recent moderation in inflation data. Fundamental indicators exhibited a varied perspective for silver. ANZ asserted that silver remains closely aligned with gold in the short term, yet anticipates that its supply-demand fundamentals will become progressively supportive in the medium to long term. London vault holdings experienced a 1.7% increase in June, reaching 28,082 tonnes, with a valuation of approximately $53.1 billion, suggesting a state of comfortable global inventories.
Meanwhile, India’s silver imports experienced a significant decline, indicative of stricter government regulations and elevated import tariffs. Imports experienced a significant decline of 87% in value, amounting to $75.57 million. Concurrently, import volumes fell dramatically by 94% year-on-year, reaching a mere 33 metric tonnes, marking the lowest level since February 2023. The government’s measures are designed to limit imports of precious metals and alleviate the strain on foreign exchange reserves, a response to unprecedented silver imports recorded in the prior financial year.
From a technical perspective, silver remains under fresh selling pressure, with open interest rising 7.77%, indicating the addition of new short positions. Immediate support is positioned at Rs 213,605, succeeded by Rs 211,375, whereas resistance is identified at Rs 219,310 and Rs 222,785. Sustained weakness below support could extend the downside, whereas a decisive breakout above resistance may trigger renewed buying interest.