Silver settled down 0.88% at Rs 2,25,450 as ongoing uncertainty surrounding US-Iran negotiations maintained elevated oil prices, heightening inflation concerns and bolstering expectations for additional tightening by the Federal Reserve. Markets currently reflect approximately a 70% likelihood of a Federal Reserve rate hike in October. Concurrently, New York Fed President John Williams has articulated that an additional rate increase by the end of the year is a plausible scenario, underscoring the necessity of bringing inflation back to its target level.
Cleveland Fed President Beth Hammack emphasised that elevated inflation and concerns regarding government debt are contributing to the rise in long-term Treasury yields. Meanwhile, Richmond Fed President Tom Barkin pointed out that inflationary pressures are extending beyond just energy and tariff-related shocks. Increasing Treasury yields and anticipations of a more stringent monetary policy persistently exert pressure on non-yielding silver. Investors are currently concentrating on the US PCE inflation report and nonfarm payrolls data for further insights into the Federal Reserve’s policy direction. Meanwhile, 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 around $52.7 billion.
The global silver market is projected to continue experiencing a structural deficit for the sixth consecutive year, with 762 million troy ounces extracted from inventories since 2021, heightening the risk of a resurgence in 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 projected to decrease by 2%. Industrial silver fabrication is projected to decline by 3%, reaching a four-year low due to subdued economic activity. In contrast, demand for coins and bars is anticipated to increase by 18%, bolstered by robust purchasing in the United States. Total global supply is projected to decrease by 2% as producer hedging returns to normal levels.
Technically, silver is experiencing renewed selling pressure, as evidenced by a 3.3% increase in open interest to 16,983, alongside a price decline of Rs 1,992. Silver is currently finding support at Rs 2,24,060, and a sustained break below this level could open the way toward Rs 2,22,665. On the upside, resistance is positioned around Rs 2,27,290, and a decisive movement above this threshold could initiate a recovery toward Rs 2,29,125.
