Silver prices fell by 1.26%, closing at Rs 217,198, as investors weighed ongoing geopolitical tensions in the Middle East against the ambiguity of the Federal Reserve’s monetary policy direction. Despite the Federal Reserve maintaining the current interest rates, three members of the Federal Open Market Committee expressed dissent, advocating for an immediate increase. Meanwhile, Chair Kevin Warsh emphasised that the decision to pause should not be seen as a move towards a more accommodative policy stance. Markets currently assign approximately a 67% probability to a 25-basis-point rate hike in September, with expectations for a more substantial 50-basis-point increase having largely diminished.
Meanwhile, U.S. economic data presented a mixed picture, with second-quarter GDP growth slowing to an annualised 1.5%, below market expectations of 2.1%. In contrast, the PCE price index declined 0.1% in June, reflecting easing inflationary pressures. Weekly jobless claims increased to 197,000, yet they remain at historically low levels, underscoring the ongoing robustness of the labour market. Fundamentally, the dynamics of the silver market exhibited a mixed outlook. Silver holdings in London vaults rose by 1.7% month-on-month, reaching 28,082 tonnes at the end of June, suggesting an increase in available inventories.
In India, silver imports experienced a significant decline of 87% year-on-year in May, reaching their lowest level in over three years. This downturn follows the government’s decision to tighten import restrictions and increase import duties on precious metals from 6% to 15%. Import volumes fell sharply by 94%, reaching a mere 33 metric tonnes. This decline underscores the effects of more stringent trade regulations designed to alleviate the strain on foreign exchange reserves in the wake of high energy prices.
From a technical perspective, silver continued to experience selling pressure as open interest rose by 1.78% to 12,990 contracts in conjunction with the price decline, suggesting the establishment of new short positions. Immediate support is positioned at Rs 215,210, with a breach beneath this threshold likely to exacerbate losses toward Rs 213,220. On the upside, resistance is observed at Rs 219,545, and a sustained move above this threshold could initiate further recovery toward Rs 221,890.