Silver settled down 1.02% at Rs 2,33,482, influenced by a strong US dollar and anticipations of an additional rate hike by the Federal Reserve, which exerted pressure on the precious metal. Robust economic indicators from the United States, coupled with assertive comments from various Federal Reserve officials, have bolstered expectations for a more stringent monetary policy. The S&P Global US flash composite PMI increased to 58.4 in September, up from 56.0 in August, indicating the most robust private-sector growth since July 2021. The Services PMI also saw an uptick, rising to 58.7 from 56.5, while the Manufacturing PMI experienced acceleration, moving to 56.7 from 53.1.
Fed officials underscored the ongoing challenges of supply-side inflation coupled with robust demand, with multiple members suggesting that additional rate increases might be necessary to mitigate inflationary pressures. Uncertainty regarding the reopening of the Strait of Hormuz, coupled with trade concerns, has also bolstered the dollar. Despite the immediate pressures, the fundamentals of silver continue to exhibit structural support, as the global market approaches its sixth consecutive year of deficit. The Silver Institute and Metals Focus estimated that 762 million troy ounces have been drawn from stocks since 2021, increasing the risk of renewed liquidity tightness.
The 2026 global silver deficit is anticipated to expand to 46.3 million ounces, up from 40.3 million ounces in 2025, despite an expected 2% decrease in total demand. Industrial silver fabrication is projected to decline by 3%, reaching a four-year low, whereas demand for coins and bars may increase by 18%, bolstered by robust purchasing activity in the United States. Global supply is anticipated to decrease by 2% as producer hedging returns to a state of normalcy. 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.
Technically, the market is experiencing renewed selling pressure, as evidenced by a 7.47% increase in open interest to 15,408, alongside a price decline of Rs 2,413. Silver is currently finding support around Rs 2,31,320, and a breach of this level may lead to exposure at Rs 2,29,160. On the upside, resistance is observed near Rs 2,35,615, while a sustained move above this level could initiate a recovery toward Rs 2,37,750.
