Silver prices concluded the trading session with a notable decline of 1.94%, settling at Rs 237,658. This downturn was influenced by a stronger U.S. dollar and anticipations of a more stringent monetary policy from the Federal Reserve, prompted by solid employment figures. In August, U.S. nonfarm payrolls experienced an increase of 162,000, building on an upwardly revised gain of 23,000 in July and notably exceeding market expectations of 56,000. The unemployment rate held firm at 4.1%, with annual wage growth moderating to 3.1%, albeit the deceleration was not as pronounced as anticipated.
The robust labour market has elevated expectations for a September Fed rate hike to nearly 65%, thereby intensifying pressure on precious metals. Fed Governor Waller indicated that continued progress toward the 2% inflation target could support holding rates at current levels, providing some counterbalance to the hawkish employment signal. Meanwhile, the fundamentals of silver continue to exhibit structural support. London vault holdings rose by 0.5% month-on-month, reaching 28,213 tonnes at the close of July, with an estimated value of $52.7 billion, which corresponds to roughly 940,423 silver bars.
The global silver market is approaching its sixth consecutive structural deficit, having seen 762 million troy ounces withdrawn from stocks since 2021, which raises concerns about potential liquidity tightness. The 2026 deficit is anticipated to expand to 46.3 million ounces, up from 40.3 million ounces in 2025, even with a 2% decrease in overall demand. Industrial fabrication is projected to decline by 3%, reaching a four-year low, whereas demand for coins and bars is anticipated to increase by 18%, bolstered by robust purchasing activity in the U.S. Global supply is anticipated to decrease by 2%, providing essential support.
Technically, the market continues to experience fresh selling pressure, evidenced by a 0.46% increase in open interest to 12,293 contracts, alongside a price decline of Rs 4,691, which suggests ongoing short-side activity. Silver is presently encountering support around Rs 234,135, and a persistent breach beneath this threshold may lead to further decline toward Rs 230,610. On the upside, resistance is positioned around Rs 241,620, and a decisive movement above this threshold could initiate a recovery toward Rs 245,580.
