Silver settled 0.92% higher at Rs 237,835, supported by U.S. inflation data that largely met expectations, easing concerns about a potential Federal Reserve rate hike. Core consumer prices increased by 0.2% on a month-on-month basis and 2.5% year-on-year in July, reinforcing the perspective that the Federal Reserve might persist in its cautious stance regarding monetary policy. Investors monitored the situation in the Strait of Hormuz, following comments from Pakistan’s defence minister indicating that the United States and Iran were approaching a consensus on the reopening of this vital maritime route. Concurrently, President Donald Trump asserted that the United States maintained total control over the strait, thereby sustaining a heightened level of geopolitical uncertainty.
Silver sustained its essential backing from industrial uses, particularly in the production of solar panels, investments in electricity grids, electronics, and electric vehicles. Chinese imports of silver-bearing ores saw a significant rise of 62.5% year-on-year in June, totalling 219,000 tonnes. In the latest data, Perth Mint silver sales experienced a notable increase of more than 65% compared to the previous month, reaching a total of 486,043 ounces. This figure also indicates a year-on-year growth of 7.5%. COMEX speculative net long positions increased by 2,679 contracts to reach 11,067 contracts for the week ending August 4, indicating a rise in bullish sentiment despite the relatively lower market liquidity of silver.
London silver vault holdings increased by 1.7% month-on-month, reaching 28,082 tonnes at the end of June. This amount is valued at 53.1 billion and is equivalent to approximately 936,052 bars. The global silver market is expected to continue experiencing a structural deficit for the sixth consecutive year, with the deficit for 2026 projected to increase to 46.3 million ounces, compared to 40.3 million in 2025. Total demand is expected to decline by 2%, while industrial fabrication is forecasted to decrease by 3%. This decline is anticipated to be partially offset by an 18% rise in demand for coins and bars. Global supply is anticipated to decrease by 2%, thereby maintaining the existing tightness.
Technically, the market is undergoing short covering, as indicated by a 1.9% reduction in open interest to 10,670 contracts, while prices have risen by Rs 2,176. Silver demonstrates immediate support at Rs 235,990, followed by additional support at Rs 234,150. Resistance is identified at Rs 240,180. Geopolitical developments, industrial demand, and global supply tightness continue to be important drivers, thus a sustained move over Rs 240,180 might prolong the upside toward Rs 242,530 while keeping a positive near-term outlook.
