Silver prices experienced a notable decline of 4.57%, closing at Rs 199,599. This downturn can be attributed to profit booking, a reduction in speculative positions, and shifts in the dynamics of the physical market, all of which have negatively impacted market sentiment. India has granted permits for the importation of around 6,500 metric tonnes of silver over the forthcoming six months to satisfy the demand associated with the festive season, following the imposition of restrictions on silver imports in May and the subsequent tightening of regulations in June. However, Indian silver premiums have decreased to $0.45 per ounce from a high of $2.50 last week, suggesting a reduction in immediate physical market tightness.
Rising crude oil prices following a drone strike on Saudi Aramco’s Shaybah field, renewed geopolitical tensions involving Iran, and persistent energy-driven inflation concerns continued to shape monetary policy expectations. While the Federal Reserve is largely anticipated to keep interest rates steady during its October meeting, market participants are forecasting a potential increase in December. COMEX silver speculative net long positions decreased by 1,874 contracts to 5,735 in the week ending October 13, indicating a reduction in bullish sentiment. At the conclusion of September 2026, London vaults contained 28,985 tonnes of silver, reflecting a month-on-month increase of 1.95%, with a total valuation of $56.6 billion.
Despite recent price weakness, the global silver market is projected to record its sixth consecutive annual deficit in 2026, with the shortfall widening to 46.3 million ounces from 40.3 million ounces in 2025. The Silver Institute and Metals Focus estimates that cumulative stock drawdowns have amounted to 762 million ounces since 2021. However, total demand is projected to decrease by 2%, while industrial silver fabrication may decline by 3%, reaching a four-year low due to diminished industrial and jewellery consumption. In contrast, demand for coins and bars is projected to increase by 18%, partially mitigating the impact of the industrial slowdown. Global silver supply is anticipated to decrease by 2%, highlighting ongoing long-term supply issues even as market liquidity shows signs of improvement.
Silver is currently experiencing a long unwinding phase, as evidenced by a 4.27% decline in open interest to 19,038 contracts, coupled with a price decrease of Rs 9,569. This suggests that the movement reflects the closure of existing positions rather than the initiation of new short positions. Immediate support is positioned at Rs 196,940, succeeded by Rs 194,290, whereas resistance is established at Rs 204,130 and Rs 208,660. A break below support could extend the correction, whereas a sustained recovery above Rs 204,130 may improve sentiment and open the way toward the next resistance level.
