Silver prices concluded the trading session with a 2.46% increase, reaching Rs 223,779. This uptick was bolstered by short covering as investors monitored diplomatic initiatives aimed at alleviating tensions between the United States and Iran, while also assessing the possible ramifications for oil prices, inflation, and the monetary policy stance of the Federal Reserve. Reports indicated that mediators are attempting to revive negotiations between Washington and Tehran, with discussions involving a possible 10-day truce to safeguard shipping through the Strait of Hormuz. However, elevated crude oil prices continue to raise concerns regarding inflation, leading several Federal Reserve officials to uphold a hawkish stance.
While the Fed is widely expected to leave interest rates unchanged at next week’s meeting, markets are pricing in more than a 60% probability of a September rate hike and nearly an 80% chance of another increase by December. Recent US inflation data indicated a moderation in consumer and producer prices in June; however, the unexpected increase in import prices has maintained uncertainty regarding the policy outlook. Fundamentally, silver continues to attract long-term support from enhancing market dynamics.
ANZ anticipates that silver will continue to be closely correlated with gold in the short term, while its fundamentals are expected to gradually improve in the medium to long term. At the conclusion of June, silver holdings in London vaults experienced a month-on-month increase of 1.7%, reaching a total of 28,082 tonnes. This amount is valued at approximately $53.1 billion, which corresponds to around 936,052 silver bars. In India, silver imports experienced a significant decline of 87% year-on-year in value and 94% in volume during May. This downturn can be attributed to the implementation of stricter import restrictions and a rise in import duties to 15%.
These measures underscore the government’s strategy to curtail imports of precious metals and safeguard foreign exchange reserves. From a technical perspective, the market observed short covering, as open interest decreased by 4.28% while prices surged significantly. Immediate support is positioned at Rs 220,490, succeeded by Rs 217,195. Resistance is observed at Rs 225,790, and a sustained breakout above this threshold may pave the way towards Rs 227,795.