Silver concluded the trading session with a 0.20% increase, reaching Rs 235,924, buoyed by a depreciating US dollar, as recent economic indicators have tempered anticipations of a Federal Reserve interest rate increase in September. In July, US retail sales experienced a decline of 0.6% month-on-month, significantly underperforming against expectations of a 0.1% increase and reversing the previous month’s 0.2% gain. Additionally, the retail sales control group also saw an unexpected decrease, which has heightened concerns regarding the resilience of consumer spending. The University of Michigan consumer sentiment index fell to 51 in early August from 55.2 in July, underperforming expectations of 54.5.
Concurrently, initial unemployment claims rose by 9,000 to 209,000 in the first week of August, surpassing market forecasts of 202,000. Softer producer and consumer inflation has diminished the necessity for monetary tightening, thereby bolstering precious metals. In the physical market, Chinese imports of silver-bearing ores experienced a significant increase of 62.5% year-on-year in June, reaching a total of 219,000 tonnes. London vault holdings rose by 1.7% month-on-month, reaching 28,082 tonnes at the end of June, with a valuation of approximately $53.1 billion. However, the global silver market continues to exhibit structural tightness and is on track for a sixth consecutive annual deficit.
The deficit is projected to expand to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025, even as total demand is anticipated to decrease by 2%. Industrial silver fabrication is anticipated to decline by 3%, reaching a four-year low, whereas demand for coins and bars is forecasted to increase by 18%, bolstered by robust purchasing activity in the United States. Global supply is projected to decrease by 2% as producer hedging returns to normal levels. Since 2021, approximately 762 million ounces have been drawn from stocks, sustaining the risk of renewed liquidity tightness.
Technically, the market is experiencing short covering, evidenced by a 0.60% decline in open interest to 10,752 contracts, accompanied by a price increase of Rs 477. Silver has established support at Rs 232,380, and a decline beneath this threshold may reveal Rs 228,830. Resistance is positioned at Rs 238,650, and a sustained movement above this threshold may catalyse additional gains toward Rs 241,370.
