Silver concluded the trading session with a gain of 0.79%, reaching Rs. 211,485. This increase was bolstered by a drop in US 10-year Treasury yields, which fell to levels not seen in nearly a month, attributed to disappointing housing data. Meanwhile, investors are weighing ongoing inflationary pressures in anticipation of the Federal Reserve’s interest rate decision scheduled for October 27-28. In September, US housing starts experienced a decline of 5.2%, accompanied by pending home sales reaching a historic low. This trend underscores the significant influence of high mortgage rates on housing demand. Recent commentary from the Fed suggests a lack of immediate urgency for tightening; however, markets are currently pricing in a 94% probability of a rate hike in December.
Hotter-than-expected US CPI and PPI readings have reinforced inflation concerns. Chicago Fed President Austan Goolsbee characterised the latest inflation data as discouraging, while Cleveland Fed President Beth Hammack cautioned that deteriorating inflation expectations might necessitate more aggressive rate increases. Investors are closely observing the forthcoming US Personal Consumption Expenditures inflation report for additional indications regarding policy direction. According to CFTC data for the week ended October 13, COMEX silver speculative net long positions decreased by 1,874 contracts to 5,735, reflecting a reduction in bullish positioning.
Meanwhile, the Silver Institute and Metals Focus reported that the global silver market is approaching its sixth consecutive annual deficit, with the shortfall anticipated to expand to 46.3 million ounces in 2026 from 40.3 million ounces in 2025. Total demand is projected to decrease by 2%, with industrial fabrication anticipated to drop by 3%, reaching a four-year low due to diminished consumption in both industrial and jewellery sectors. Conversely, demand for coins and bars is anticipated to rise by 18%, bolstered by a resurgence in US investment demand.
Global silver supply is projected to decline by 2%, with 762 million ounces having been extracted from inventories since 2021. This underscores a persistent structural tightness in the market, even as liquidity conditions show signs of improvement. Silver holdings in London vaults totalled 28,985 tonnes at the end of September, reflecting a month-on-month increase of 1.95%. Silver is currently experiencing short covering, evidenced by a 1.45% decrease in open interest to 19,522 contracts, alongside a price increase of Rs. 1,657. Immediate support is positioned at Rs. 208,570, succeeded by Rs. 205,650, whereas resistance is identified at Rs. 213,920, beyond which prices may approach Rs. 216,360.
