Silver prices experienced a decline of 1.64%, settling at Rs 222,664, as investors exhibited caution in light of persistent geopolitical tensions in the Middle East and the potential ramifications for inflation and global monetary policy. Despite indications that the United States and Iran would persist with peace negotiations, recent military actions and interruptions to energy supplies via the Strait of Hormuz have sustained heightened inflation apprehensions. Market participants maintain expectations for at least one further Federal Reserve rate hike this year, although the policy outlook continues to exhibit uncertainty.
New York Fed President John Williams highlighted that demand propelled by artificial intelligence continues to be a significant inflationary influence. Meanwhile, U.S. economic data presented a mixed picture, with existing home sales falling 2.4% in June to an annualised 4.09 million units, while weekly jobless claims declined to 215,000, reflecting continued resilience in the labour market. Fundamental indicators also demonstrated significant advancements in the physical silver market. Silver holdings in London vaults rose by 0.6% to 27,611 tonnes at the end of May, reflecting stable institutional inventories.
In India, there has been a significant decline in silver imports as a result of the government’s stricter regulations on the importation of precious metals. In May, imports experienced a significant decline, with a reduction of 87% in value and 94% in volume compared to the same month last year, marking the lowest levels observed since February 2023. The government has implemented more stringent import authorisation requirements and raised import duties on gold and silver to 15% as a measure to alleviate pressure on foreign exchange reserves following unprecedented silver imports in the last financial year.
Technically, silver is experiencing renewed selling pressure, as evidenced by a 1.32% increase in open interest, which suggests the establishment of new short positions. Immediate support is positioned at Rs 220,450, and a breach beneath this threshold may lead to further declines towards Rs 218,230. On the upside, resistance is observed at Rs 225,940, with a sustained move above this level likely to facilitate a further recovery toward Rs 229,210.