Silver settled 0.9% higher at Rs 238,048, buoyed by weaker US economic data that diminished expectations of an imminent Federal Reserve interest-rate hike. US retail sales experienced a decline of 0.6% month-on-month in July, falling short of expectations that anticipated a 0.1% increase. Concurrently, the University of Michigan consumer sentiment index decreased to 51 in early August, down from 55.2 in July. Initial unemployment claims increased by 9,000 to 209,000, as softer producer and consumer inflation further diminished the necessity for tighter monetary policy.
Investors are currently anticipating the release of the FOMC meeting minutes and Fed Chair Kevin Warsh’s speech at Jackson Hole for further insights into the trajectory of interest rates. Geopolitical tensions persisted in the wake of recent Israeli strikes on Lebanon and suggested US sanctions against Iran. However, the ongoing flow of crude through the Strait of Hormuz mitigated immediate inflationary worries. In physical markets, Chinese imports of silver-bearing ores surged 62.5% year-on-year to 219,000 tonnes in June, reflecting sustained industrial demand. London silver vault holdings rose by 1.7% month-on-month, reaching a total of 28,082 tonnes, with a valuation of $53.1 billion.
Fundamentally, the silver market is approaching its sixth consecutive structural deficit, having seen 762 million troy ounces withdrawn from stocks since 2021, thereby heightening the risk of renewed liquidity tightness. 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 silver fabrication is projected to decline by 3%, reaching a four-year low, whereas demand for coins and bars may increase by 18%.
Global silver supply is projected to decline by 2%, further reinforcing the longer-term supply-demand imbalance. Technically, silver is experiencing short covering as open interest has decreased by 0.5% to 10,699 contracts, while prices have increased by Rs 2,124. Support is positioned at Rs 236,220, and a decline beneath this threshold may reveal Rs 234,395. On the upside, resistance is observed at Rs 239,435, while a sustained move above this level could result in Rs 240,825.
