Silver prices concluded the trading session down by 1% at Rs 235,447, as the US dollar held steady following the release of US inflation data, which indicated a slight moderation in both annual headline and core inflation. This development alleviated some of the immediate pressure on the Federal Reserve regarding potential interest rate hikes. In the first week of August, US weekly initial jobless claims rose by 9,000, reaching a total of 209,000, surpassing the anticipated figure of 202,000. Meanwhile, continuing claims saw a decrease of 22,000, bringing the total down to 1.777 million. In July, US producer prices remained stable following a revised decrease of 0.1% in June. Meanwhile, core producer prices experienced a month-on-month increase of 0.2%, a deceleration from the previously revised rise of 0.4%.
However, renewed tensions in the Middle East present a potential inflationary risk, especially if disruptions to energy supplies lead to an increase in oil prices, thereby complicating the Federal Reserve’s policy outlook. Silver maintains structural support from its various industrial applications, which encompass solar-panel manufacturing, electronics, electric vehicles, and investments in electricity grids. Chinese imports of silver-bearing ores increased by 62.5% year-on-year in June, reaching 219,000 tonnes, underscoring persistent industrial activity. 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, which corresponds to roughly 936,052 silver bars.
The global silver market is anticipated to continue experiencing a structural deficit for the sixth consecutive year, with projections indicating that the deficit will expand to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025. Total demand is projected to decrease by 2%, whereas industrial fabrication is anticipated to drop by 3%, reaching a four-year low. This decline is partially attributed to the heightened risks associated with weaker global growth stemming from the Iran conflict. In contrast, demand for coins and bars is projected to increase by 18%, bolstered by heightened purchasing activity in the United States.
Global silver supply is anticipated to decrease by 2%, with 762 million troy ounces having been extracted from inventories since 2021, thereby sustaining ongoing liquidity apprehensions in the longer term. Technically, the market continues to experience new selling pressure, as open interest has increased by 1.35% to 10,816 contracts, coinciding with a decline in prices of Rs 2,388. Silver is presently finding support around Rs 233,500, and a decline beneath this threshold may reveal Rs 231,550. On the upside, resistance is positioned at Rs 237,700, and a sustained move above this threshold could pave the way toward Rs 239,950.
