Silver settled down 0.25% at Rs 232,118 as investors assessed tensions in the Middle East and positioned themselves ahead of significant monetary policy meetings by the U.S. Federal Reserve, Bank of England, and Bank of Japan. The Federal Reserve is widely anticipated to increase rates by 25 basis points this week, driven by ongoing inflationary pressures. U.S. consumer inflation held steady at 3.4% in August, consistent with July’s figures and aligned with expectations. Meanwhile, the monthly CPI experienced a 0.4% increase, representing the most significant rise in three months.
U.S. producer prices experienced an uptick in August, driven by increased wholesale energy costs contributing to inflationary pressures. Concurrently, labour market data suggested robust employment conditions. For the week ended September 8, COMEX silver speculators increased net long positions by 2,006 contracts to 14,176, reflecting a more robust bullish stance despite the recent decline in prices. London vault holdings reached 28,213 tonnes at the end of July, reflecting a month-on-month increase of 0.5% and valued at approximately $52.7 billion, which is equivalent to around 940,423 silver bars.
The global silver market is approaching its sixth consecutive year of structural deficit, having seen 762 million troy ounces withdrawn from stocks since 2021, thereby heightening the risk of renewed liquidity constraints. The 2026 deficit is anticipated to expand to 46.3 million ounces, up from 40.3 million ounces in 2025, even as total demand is forecasted to decrease by 2%. Industrial fabrication is anticipated to decline by 3%, reaching a four-year low, whereas demand for coins and bars is expected to increase by 18%, bolstered by robust investment demand in the U.S. Total global supply is projected to decrease by 2% as producer hedging returns to normal levels.
Technically, the silver market continues to experience long liquidation, as evidenced by a 0.44% decline in open interest to 13,499, alongside a price drop of Rs 572. Silver is presently encountering support at Rs 230,100, and a breach beneath this threshold may reveal Rs 228,085. Resistance is positioned at Rs 233,885, and a sustained movement above this threshold may propel prices toward Rs 235,655.
