Silver concluded the trading session with a decline of 2.51%, settling at Rs. 189,453. This downturn can be attributed to ongoing inflation worries, robust economic growth in the United States, and anticipations surrounding a possible interest rate increase in the near future. The US PCE price index rose by 0.5% month-on-month in September, resulting in an annual inflation rate of 3.6%. Concurrently, core PCE inflation experienced an acceleration to 3.1%. Meanwhile, US GDP expanded at an annualised rate of 3.4% in the third quarter, surpassing market expectations of 3.2%.
The Federal Reserve maintained its current interest rates, yet market participants are still factoring in an almost 90% likelihood of an increase in December. Analysts have revised their silver price outlook downward in light of elevated Treasury yields, a robust US dollar, and the anticipation of prolonged higher interest rates; however, a recovery is projected for 2027. The global silver market is on track for its sixth consecutive annual deficit, with the anticipated shortfall expected to increase to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025. Despite the structural deficit, total demand is projected to decrease by 2%, while industrial silver fabrication may decline by 3% to reach a four-year low, driven by subdued industrial activity and geopolitical uncertainties.
In contrast, demand for coins and bars is projected to rise by 18%, bolstered by a resurgence in investment demand within the United States. Global silver supply is anticipated to decrease by 2%. According to the Silver Institute and Metals Focus, approximately 762 million ounces have been drawn from inventories since 2021, underscoring persistent supply constraints. However, enhanced liquidity in the London market has alleviated immediate squeeze concerns, with potentially available silver stocks representing 28% of London vault holdings at the end of March.
In the interim, silver reserves stored in London vaults rose by 1.95% month-over-month, reaching a total of 28,985 tonnes by the close of September, with a valuation of $56.6 billion. Technically, the market is experiencing new selling pressure, as open interest has risen by 7.62% to 17,862 contracts, while prices have decreased by Rs. 4,872. Silver is presently encountering support at Rs. 187,630, with additional support at Rs. 185,800, while resistance is established at Rs. 192,600. A sustained move above this level could push prices toward Rs. 195,740.
