As global bond yields shot to multi-year highs due to worries about excessive government expenditure and ongoing inflation, silver finished down 2.36% at Rs 232,419 amid a general correction in the metals market. Rising crude oil prices have further solidified concerns regarding inflation and interest rates. However, silver has maintained its support due to diminished expectations of a Federal Reserve rate hike, as disappointing U.S. economic data has heightened the probability of a stable policy stance in September. The University of Michigan consumer sentiment index decreased to 51 in early August, down from 55.2 in July.
Concurrently, U.S. retail sales experienced a month-on-month decline of 0.6% in July, contrasting with expectations of a 0.1% increase. Initial unemployment claims increased by 9,000 to reach 209,000, surpassing the anticipated figure of 202,000, which suggests a deterioration in labor-market conditions. Industrial fundamentals continue to provide a favourable backdrop, as silver demand is bolstered by photovoltaic solar panels, electric vehicles, green-energy infrastructure, and artificial-intelligence data centers. Chinese imports of silver-bearing ores surged 62.5% year-on-year to 219,000 tonnes in June, underscoring persistent processing activity.
Speculative positioning, however, showed signs of moderation, as CFTC silver net long positions decreased by 755 contracts to reach 10,312 contracts in the week ending August 11. This indicates that capital has become more heavily concentrated in gold. London silver vault holdings rose by 1.7% month-on-month, reaching 28,082 tonnes at the end of June, with a valuation of approximately $53.1 billion. Structurally, the silver market is on track for a sixth consecutive annual deficit, having seen 762 million ounces withdrawn from stocks since 2021. The 2026 deficit is anticipated to expand to 46.3 million ounces from 40.3 million in 2025, even with a 2% decrease in total demand, while total supply is also projected to decline by 2%.
Industrial fabrication is projected to decrease by 3%, reaching a four-year low, while demand for coins and bars is expected to increase by 18%. Silver is currently experiencing renewed selling pressure, as evidenced by a 6.41% increase in open interest to 11,432 contracts, coinciding with a decline in prices of Rs 5,629. Immediate support is positioned at Rs 230,405, beneath which prices may test Rs 228,385. Resistance is identified at Rs 235,380; a sustained movement above this threshold could propel prices toward Rs 238,335.
