Silver concluded the day with a 0.17% increase, reaching Rs 239,427, as the dollar experienced a slight decline. Investors are strategically positioning themselves in anticipation of critical U.S. inflation data, which may provide insights into the Federal Reserve’s trajectory regarding interest rates. Markets currently reflect a 60% probability of a U.S. rate hike at the forthcoming policy meeting, an increase from 50% observed last week. Concurrently, both the European Central Bank and the Bank of Japan are anticipated to implement rate increases this month. Renewed U.S.-Iran fighting has elevated oil prices, heightening inflationary concerns and maintaining a spotlight on monetary-policy expectations.
UBS anticipates that the Federal Reserve will implement a 25 basis point increase in interest rates during both September and December. This expectation is grounded in stronger-than-expected U.S. employment figures, hawkish signals from the Fed, ongoing supply chain disruptions, and escalating inflationary pressures. Despite weaker demand expectations, silver continues to receive structural support from investment, hedging, and central bank-related precious metals demand. London silver vault holdings rose by 0.5% month-on-month, reaching 28,213 tonnes at the end of July. This amount is valued at $52.7 billion and is equivalent to roughly 940,423 silver bars.
The global silver market is projected to continue its structural deficit for the sixth consecutive year, with the deficit anticipated to expand to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025. Total demand is anticipated to decrease by 2%, whereas industrial fabrication is expected to drop by 3%, reaching a four-year low.However, demand for coins and bars is projected to increase by 18%, serving as a significant counterbalance. Global supply is anticipated to decrease by 2%, with 762 million troy ounces having been extracted from inventories since 2021, underscoring potential liquidity risks.
Technically, the market is experiencing short covering, as evidenced by a 0.8% decline in open interest to 12,322, accompanied by a price increase of Rs 411. Silver has support at Rs 237,365, and a break below this level could lead to Rs 235,300. On the upside, resistance is positioned at Rs 241,610, and a sustained movement above this threshold could lead to further gains toward Rs 243,790.
