Silver settled 1.1% lower at Rs 209,168 as rising oil prices intensified inflation concerns and bolstered expectations of tighter monetary policy. Oil prices resumed their upward trajectory following a diplomat’s dismissal of reports suggesting an imminent resolution to the US-Iran conflict. Concurrently, rising tensions in the Middle East and Eastern Europe, along with a surge in tanker attacks in the Strait of Hormuz, have amplified concerns regarding potential supply disruptions. Stronger-than-anticipated inflation data from US consumers and producers has further weakened sentiment, with Chicago Fed President Austan Goolsbee characterising the latest figures as discouraging.
Cleveland Fed President Beth Hammack cautioned that the Federal Reserve may need to adopt a more aggressive stance on interest rate hikes should inflation expectations deteriorate markedly. Although the Fed is widely expected to maintain its current interest rates next week, market participants are anticipating a potential rate increase in December. Meanwhile, the forthcoming US Personal Consumption Expenditures inflation data continues to be a significant point of interest. Data from the CFTC reveals that speculative net long positions in COMEX silver decreased by 1,874 contracts, bringing the total to 5,735 for the week ending October 13. This shift suggests a decline in bullish sentiment among investors.
Meanwhile, the silver market is anticipated to experience its sixth consecutive annual structural deficit, with the global shortfall projected to expand to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025. Since 2021, approximately 762 million ounces have been drawn from inventories, raising concerns about potential liquidity constraints despite improving availability in London vaults. Total silver demand is projected to decrease by 2% in 2026, driven by a reduction in industrial and jewellery consumption. Industrial fabrication is anticipated to decline by 3%, reaching a four-year low.
In contrast, demand for coins and bars is anticipated to increase by 18%, bolstered by a resurgence in investment demand within the United States. Global silver supply is projected to decrease by 2%, which offers fundamental support to the market, even in light of short-term demand apprehensions. Silver is currently experiencing new selling pressure, as evidenced by a 1.87% increase in open interest to 19,888 contracts, coupled with a price decline of Rs 2,317. Support is positioned at Rs 208,170, with an additional level at Rs 207,170. Resistance is identified at Rs 210,520, beyond which prices may approach Rs 211,880.
