Silver prices experienced a significant decline of 3.09%, closing at Rs 2,27,442. This downturn can be attributed to the stagnation in US-Iran negotiations, which has contributed to elevated oil prices and bolstered expectations for further tightening measures by the Federal Reserve aimed at controlling inflation. President Donald Trump dismissed Iran’s recent offer to reopen the Strait of Hormuz, while Iran insisted on maintaining its stringent conditions, thereby heightening uncertainty regarding energy supplies and global economic growth. Several Federal Reserve officials endorsed a hawkish position, with Cleveland Fed President Beth Hammack highlighting persistent economic growth, a strong labour market, and increasing worries regarding government debt.
New York Fed President John Williams indicated that an additional rate hike by the end of the year is a plausible scenario. Richmond Fed President Tom Barkin also emphasised the wider inflationary pressures that extend beyond energy and tariffs. Markets are currently anticipating the US PCE inflation gauge and critical employment data for additional insights into monetary policy. London silver vault holdings reached 28,213 tonnes at the end of July 2026, reflecting a month-on-month increase of 0.5% and valued at $52.7 billion, which corresponds to roughly 940,423 silver bars.
Despite the recent correction, the global silver market is approaching a sixth consecutive structural deficit, with 762 million troy ounces withdrawn from stocks since 2021, heightening the risk of renewed liquidity constraints.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, despite a projected 2% decrease in total demand. Industrial silver fabrication is expected to decline by 3%, reaching a four-year low, whereas demand for coins and bars is anticipated to increase by 18%. Total supply is anticipated to decrease by 2%, which is likely to offer fundamental support to the market.
Technically, silver is experiencing renewed selling pressure, as evidenced by a 10.14% increase in open interest to 16,422, alongside a price decline of Rs 7,254. This suggests heightened participation amid the downward movement. Silver is presently encountering support around Rs 2,24,730, and a persistent breach beneath this threshold may reveal Rs 2,22,015. On the upside, resistance is positioned around Rs 2,31,230, and a decisive movement above this threshold could initiate a recovery toward Rs 2,35,015.
