Silver concluded the trading session with a decline of 1.62%, settling at Rs 2,23,561. This downturn was influenced by a robust dollar, escalating oil prices, and revived apprehensions regarding inflation and the potential for tighter monetary policy. The US 10-year Treasury yield climbed to 5.32%, returning to levels last seen in 2002, while the 30-year yield rose to a fresh 24-year high of 5.70%, increasing pressure on non-yielding precious metals. Markets are currently assigning a probability of approximately 78% to the likelihood of rates remaining unchanged this month, whereas the probability of a 25-basis-point increase in December is estimated to be around 69%.
Despite the near-term pressure, LBMA delegates forecast silver could reach $97 per ounce over the next 12 months from around $61 currently, reflecting expectations of tightening physical fundamentals. Perth Mint has indicated robust demand, as September silver sales surged 81.3% month-on-month to reach 605,408 ounces, marking the highest level since March and exceeding the previous year’s figures by 4.6%. London 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 experiencing a structural deficit for the sixth consecutive year, having seen 762 million ounces extracted from inventories since 2021, thereby heightening the risk of renewed liquidity pressures. The 2026 deficit is anticipated to expand to 46.3 million ounces, up from 40.3 million ounces in 2025, even as total demand experiences a decline of 2%. Industrial fabrication is projected to decrease by 3%, reaching a four-year low, whereas demand for coins and bars is anticipated to increase by 18%, bolstered by robust purchasing activity in the United States. Total supply is projected to decline by 2%.
Technically, the market is experiencing renewed selling pressure, as open interest has risen by 6.83% to 17,728, while prices have decreased by Rs 3,681, suggesting heightened participation from bearish investors. Silver is currently finding support at Rs 2,21,220, and a sustained break below this level could lead to a test of Rs 2,18,880. On the upside, resistance is positioned at Rs 2,26,055, and a decisive movement above this threshold could initiate a recovery toward Rs 2,28,550.
