Silver settled 2% higher at Rs 244,213, buoyed by a weaker US dollar as investors evaluated renewed inflation risks stemming from escalating tensions in the Middle East and anticipated key US inflation data for insights into the Federal Reserve’s policy outlook. The dollar declined to a four-month low, as markets are estimating approximately a 60% probability of a Fed rate increase at the September 16 meeting. UBS anticipates rate increases of 25 basis points in both September and December, attributing this outlook to robust US employment figures, assertive communication from policymakers, and escalating inflation risks.
ADP data indicated that US private employers added an average of 12,000 jobs per week through August 22, an increase from the previously revised figure of 10,000. Attention now shifts to Thursday’s PPI and Friday’s CPI, as elevated inflation may bolster expectations for rate hikes and constrain silver’s potential for appreciation. Meanwhile, oil prices have risen to levels not seen in over three months, driven by escalating tensions between the US and Iran. This development has bolstered safe-haven interest while simultaneously heightening concerns regarding inflation and global economic growth.
London vault holdings reached 28,213 tonnes at the end of July, reflecting a month-on-month increase of 0.5% and a valuation of $52.7 billion. The global silver market is anticipated to experience a sixth consecutive structural deficit, which is projected to expand to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025, even in the face of a 2% decrease in total demand. Industrial fabrication is anticipated to decrease by 3%, whereas demand for coins and bars is expected to increase by 18%; global supply is projected to contract by 2%. Silver is currently trading at a level that is 35% lower than its peak of $121.6 per ounce reached in January, following a remarkable increase of 147% throughout 2025.
Technically, the market is experiencing short covering, evidenced by a 6.11% decline in open interest to 11,612, while prices have increased by Rs 4,786. Silver is finding support around Rs 240,400, and a persistent decline beneath this threshold may reveal Rs 236,585. On the upside, resistance is positioned at Rs 246,565, and a decisive move above this threshold could propel prices toward Rs 248,915.
