Silver prices concluded the session at Rs 225,836, reflecting a decline of 0.77% as investors assessed the implications of U.S. monetary policy and anticipated future interest rate adjustments. The downside remained constrained following an agreement between Iran and Oman to partially reopen the Strait of Hormuz, which alleviated concerns regarding potential disruptions in energy supply. This development contributed to a decline in crude oil prices and a subsequent reduction in inflation expectations. Market participants have adjusted their expectations regarding Federal Reserve tightening, currently anticipating only one rate hike by the end of the year, a reduction from the two hikes projected just a week prior.
In a further indication of caution, the ADP employment report revealed that the U.S. economy generated merely 44,000 private-sector jobs in July, significantly underperforming expectations and heightening attention on the forthcoming nonfarm payrolls report. However, Fed officials Lisa Cook and Jeff Schmid maintained a hawkish tone, emphasising that inflation remains above target and additional policy tightening may still be required if price pressures persist. Fundamental developments indicated a divergence in demand conditions throughout the silver market. London vault silver holdings rose by 1.7% month-on-month, reaching a total of 28,082 tonnes, with an estimated value of around $53.1 billion.
In India, there has been a significant decline in silver imports, attributed to the implementation of stricter government regulations and increased import duties. In May, imports experienced a significant decline, falling 87% in value and 94% in volume, resulting in a mere 33 metric tonnes, marking the lowest level since February 2023. The government’s decision to expand import restrictions and raise duties to 15% is aimed at reducing precious metal imports and alleviating pressure on foreign exchange reserves following unprecedented silver imports in the previous financial year.
Technically, silver remains under pressure as long liquidation persisted, with open interest declining by 2.6%, signalling profit booking by market participants. Immediate support is positioned at Rs 223,975, with subsequent support at Rs 222,110, while resistance is identified at Rs 228,050. A sustained move above this level could trigger further buying momentum and extend gains toward the Rs 230,260 mark.