As investors awaited U.S. inflation data and Federal Reserve Chair Kevin Warsh’s remarks for additional hints on the interest-rate outlook, silver finished 0.96% lower at Rs 244,220 amid profit taking. The U.S. Treasury buyback support plan has driven the dollar to multi-month lows, thereby mitigating downside pressure on the precious metal. Meanwhile, market participants are closely monitoring the July PCE price index set to be released on Wednesday, as well as Warsh’s speech at Jackson Hole on Friday. Market participants are currently assigning a 36% likelihood to a rate increase in September, juxtaposed with a 64% probability that interest rates will remain stable, as indicated by the CME FedWatch Tool.
U.S. economic data indicated a deceleration in activity, as retail sales declined by 0.6% month-on-month in July, significantly underperforming the anticipated 0.1% increase. Additionally, initial jobless claims increased by 9,000, reaching a total of 209,000. Chinese imports of silver-bearing ores surged 62.5% year-on-year in June, reaching 219,000 tonnes, which suggests robust processing activity. Citi maintained a bullish outlook, targeting silver at $75 per ounce over the next zero to three months and $90 over six to 12 months, supported by stronger investment demand and expectations of a less hawkish Federal Reserve.
London silver vault holdings rose by 1.7% month-on-month, reaching 28,082 tonnes at the end of June, with a valuation of $53.1 billion. The Silver Institute and Metals Focus anticipate that the market will continue to experience a structural deficit for the sixth consecutive year, having seen 762 million ounces drawn from stocks since 2021. The global deficit is anticipated to expand to 46.3 million ounces in 2026, up from 40.3 million in 2025, even as total demand experiences a 2% decrease. Industrial fabrication is projected to decline by 3%, whereas demand for coins and bars is anticipated to increase by 18%.
Total supply is anticipated to decrease by 2%, thereby reinforcing the medium-term fundamental outlook. Technically, the market is experiencing long liquidation, evidenced by a 3.74% decline in open interest to 9,035, alongside a price drop of Rs 2,377. Silver exhibits support at Rs 242,280, with an additional level at Rs 240,345. Resistance is identified at Rs 247,475; a persistent movement beyond this threshold may pave the way toward Rs 250,735.
