Silver settled 0.51% higher at Rs 2,27,242, buoyed by softer US jobs data and diminished expectations of an October Federal Reserve rate hike. However, the gains were constrained by a stronger dollar, increasing Treasury yields, and ongoing inflation concerns. Markets currently assign approximately a 78% likelihood that the Federal Reserve will maintain the current interest rates this month. Meanwhile, Cleveland Fed President Beth Hammack has underscored the potential risks associated with fiscal policy and inflation, while New York Fed President John Williams indicated that an additional rate hike by the end of the year is still a plausible scenario.
Cost pressures in the US services sector have escalated at the most rapid rate observed in over four years, coinciding with Treasury yields reaching new peaks not seen in 24 years, as the global bond market continues to experience a selloff. COMEX silver speculators decreased net long positions by 5,278 contracts to 7,738 for the week ending September 29, reflecting a more cautious positioning stance. London silver vault holdings reached 28,213 tonnes at the end of July, reflecting a month-on-month increase of 0.5%. This amount is valued at $52.7 billion and is approximately equivalent to 940,423 bars.
Despite subdued demand forecasts, the global silver market is on track for a sixth consecutive structural deficit, having seen 762 million troy ounces withdrawn from inventories since 2021, thereby heightening the risk of a resurgence in liquidity constraints. The 2026 deficit is anticipated to expand to 46.3 million ounces, up from 40.3 million in 2025, despite a 2% decrease in total demand. Industrial fabrication is projected to decline by 3%, reaching a four-year low, whereas demand for coins and bars is anticipated to increase by 18%. Total supply is projected to decline by 2% as producer hedging normalises.
Technically, the market is experiencing new buying activity, as indicated by an increase in open interest of 0.41% to 16,517, alongside a price rise of Rs 1,155. Silver has established support at Rs 2,25,055, and a decline beneath this threshold may result in a testing of Rs 2,22,865. On the upside, resistance is positioned at Rs 2,28,755, and a sustained movement above this threshold could propel prices toward Rs 2,30,265.
