Silver settled down 1.22% at Rs 194,325, pressured by a stronger dollar, elevated Treasury yields, and expectations that interest rates may remain higher for longer as investors assessed the Federal Reserve’s policy outlook. The strengthened to 102.2, achieving a two-week high and extending gains for a third consecutive session. The US Federal Reserve maintained interest rates at 3.75%-4.00% in October after a 25-basis-point increase in September, with two policymakers expressing support for an additional hike.
The central bank emphasised robust domestic spending, vigorous economic activity, and consistently high inflation, maintaining a spotlight on the uncertainty surrounding future rate decisions. In September, US durable goods orders experienced a month-on-month increase of 1.8%, surpassing the anticipated growth of 1.5%. Conversely, building permits saw a decrease of 0.4%, resulting in an annualised rate of 1.398 million. Analysts have revised their silver price outlook downward in light of the dollar’s strength and rising yields, projecting an average of $66.75 per ounce for 2027, down from $70.30 for 2026, though a recovery is anticipated in the coming year.
Fundamentally, the silver market is anticipated to experience its sixth consecutive annual deficit, with the shortfall expected to expand to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025. Total demand is anticipated to decrease by 2% as a result of diminished industrial and jewellery consumption, whereas demand for coins and bars may see an increase of 18%. Industrial silver fabrication is projected to decline by 3%, reaching a four-year low, as apprehensions regarding global economic growth and geopolitical disruptions persist. Total supply is projected to decline by 2%, reinforcing the existing supply constraints.
At the conclusion of September, silver holdings in London vaults experienced a month-on-month increase of 1.95%, reaching a total of 28,985 tonnes, which is valued at $56.6 billion. Despite enhanced market liquidity, the cumulative inventory withdrawals since 2021 persist in underscoring structural tightness.
Technically, the market is experiencing renewed selling pressure, as evidenced by a 0.36% increase in open interest to 16,598 contracts, alongside a price decline of Rs 2,392, which suggests the establishment of new short positions. Silver exhibits support at Rs 193,370; a decline beneath this threshold may lead prices to test Rs 192,410. Conversely, resistance is identified at Rs 195,920, and a sustained advance beyond this point could propel prices toward Rs 197,510.
