Silver prices concluded the trading session with a notable decline of 4.14%, settling at Rs 2,34,099. This drop coincided with a strengthening dollar index, which reached 99, alongside renewed gains in oil prices. The backdrop of escalating tensions between the US and Iran has heightened expectations for a potential rate hike by the Federal Reserve in the upcoming week. Markets are currently assigning a 70% likelihood to a 25-basis-point increase by the Federal Reserve, an increase from the previous 60%. Additionally, an increase in October is fully incorporated into market expectations. Despite a 0.4% acceleration in headline PPI, core PPI experienced a more modest rise of 0.2% month-on-month, falling short of the prior 0.3% increase and market expectations.
This underscores the importance of Friday’s CPI report for evaluating future monetary policy. Meanwhile, the European Central Bank raised borrowing costs by 25 basis points as anticipated and revised its inflation forecasts upward, contributing to the prevailing global tightening environment. Despite subdued near-term demand expectations, the silver market is approaching its sixth consecutive year of structural deficit, with 762 million troy ounces withdrawn from stocks since 2021, heightening the likelihood of renewed liquidity constraints. London vault holdings reached 28,213 tonnes at the end of July, reflecting a month-on-month increase of 0.5%.
This amount is valued at $52.7 billion and is roughly equivalent to 940,423 silver bars. The global silver deficit for 2026 is projected to expand to 46.3 million ounces, up from 40.3 million ounces in 2025, despite an anticipated decline in total demand of 2%. Industrial fabrication is anticipated to decline by 3%, reaching a four-year low, whereas demand for coins and bars is forecasted to increase by 18%, bolstered by robust purchasing activity in the United States. Global supply is projected to decrease by 2% as producer hedging returns to its typical levels.
Technically, the market is experiencing renewed selling pressure, as evidenced by a 12.12% increase in open interest alongside a price decline of Rs 10,114, suggesting heightened participation on the downside. Silver is currently finding support at Rs 2,30,300. A breach of this level may lead to additional weakness, potentially targeting Rs 2,26,500. On the upside, resistance is positioned at Rs 2,41,100, and a sustained move above this threshold may initiate a recovery toward Rs 2,48,100.
