Silver settled 1.88% higher at Rs 236,787, buoyed by expectations that the US Treasury will at least double the size of its buyback operations for long-term notes and bonds, which could enhance liquidity in the government bond market. However, the metal continued to face pressure from heightened global bond yields and increasing oil prices, as tensions between the US and Iran escalated, with few indications of a resolution to reopen the Strait of Hormuz. The 30-year US Treasury yield has recently attained a level not seen in 19 years, while sovereign yields in major economies have surged to multi-decade peaks. US economic data indicated a trend of softer growth, as evidenced by the University of Michigan consumer sentiment index, which decreased to 51 in early August from 55.2 in July.
Additionally, retail sales experienced a month-on-month decline of 0.6% in July, contrary to expectations of a 0.1% increase. Initial jobless claims increased by 9,000 to 209,000, surpassing the anticipated figure of 202,000. In June, Chinese imports of silver-bearing ores surged by 62.5% year-on-year, reaching 219,000 tonnes. This trend underscores the persistent demand from the world’s leading industrial consumer. CFTC data indicated that silver net-long positions decreased by 755 contracts to 10,312 contracts in the week ending August 11, implying a degree of selectivity in investment flows within the precious metals sector.
London vault holdings rose by 1.7% month-on-month, reaching a total of 28,082 tonnes, with an estimated value of around $53.1 billion. Fundamentally, the silver market is approaching its sixth consecutive year of structural deficit, 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 ounces in 2025, even as total demand is expected to decrease by 2%. Industrial fabrication is projected to decline by 3%, reaching a four-year low, whereas demand for coins and bars is anticipated to increase by 18%. Global supply is projected to decline by 2%, reinforcing the medium-term supply tightness.
From a technical perspective, the market is experiencing short covering, evidenced by a 7.23% decline in open interest to 10,661, alongside a price increase of Rs 4,368. Silver is currently finding support at Rs 230,710, and a breach of this level could reveal Rs 224,635. On the upside, resistance is positioned at Rs 240,080, and a sustained move above this threshold could catalyse additional gains toward Rs 243,375.
