Silver settled 1.94% lower at Rs. 195,719 as rising crude oil prices and stronger-than-expected US consumer and producer inflation reinforced expectations of prolonged elevated interest rates, exerting downward pressure on the precious metal. climbed to a more than five-month high following Houthi attacks in Saudi Arabia, intensifying concerns over energy supply disruptions and inflationary pressures. The Federal Reserve is anticipated to maintain its current interest rates during the meeting scheduled for October 27-28, as market expectations reflect a mere 9% probability of an increase in October, while the likelihood rises to over 81% for December. Investors are anticipating the release of US PCE inflation data on October 29 to gain insights into potential policy directions.
India has granted permits for the importation of approximately 6,500 tonnes of silver over the forthcoming six months to satisfy demand during the festive season, subsequent to prior limitations on silver imports. Domestic silver premiums have decreased to $0.45 per ounce, down from as high as $2.50 last week, suggesting a reduction in physical market tightness. Meanwhile, the global silver market is anticipated to experience its sixth consecutive annual deficit in 2026, with the shortfall expected to expand to 46.3 million ounces from 40.3 million ounces in 2025.
Total demand is projected to decrease by 2%, with industrial silver fabrication anticipated to drop by 3%, reaching a four-year low due to diminished industrial and jewellery consumption. In contrast, demand for coins and bars is anticipated to rise by 18%, bolstered by a resurgence in investment demand within the United States. Global silver supply is projected to decrease by 2%, with around 762 million ounces having been extracted from inventories since 2021. This underscores a continued structural tightness, even in the context of enhanced liquidity in the London market. Silver holdings in London vaults increased by 1.95% month-on-month, reaching a total of 28,985 tonnes at the close of September.
Silver is currently experiencing a phase of long unwinding, as evidenced by a reduction in open interest by 11.35% to 16,877 contracts, coinciding with a price decrease of Rs. 3,880. Immediate support is positioned at Rs. 192,470, succeeded by Rs. 189,230, whereas resistance is identified at Rs. 198,640 and Rs. 201,570. A breach of support could extend the decline, whereas a sustained move above resistance may trigger a recovery.
