Silver settled 0.25% higher at Rs 211,187, buoyed by a weaker dollar, which declined to 101.6, marking its lowest level in two weeks. This movement occurred amid concerns regarding artificial intelligence spending and a high interest rate environment that has negatively impacted investor sentiment and bond yields. Stronger than anticipated US consumer and producer inflation readings have underscored apprehensions regarding enduring price pressures. Chicago Fed President Austan Goolsbee characterised the most recent inflation data as discouraging, whereas Cleveland Fed President Beth Hammack cautioned that the central bank may require more assertive rate hikes should inflation expectations deteriorate markedly.
Fed Chair Warsh did not indicate the outcome of the forthcoming FOMC meeting, which has led traders to concentrate on the anticipated direction of monetary policy. In the interim, silver reserves stored in London vaults rose by 1.95% month-over-month, reaching a total of 28,985 tonnes at the close of September, with a valuation of $56.6 billion. According to the Silver Institute and Metals Focus, the silver market is on track for its sixth consecutive annual structural deficit, with cumulative stock drawdowns totalling 762 million ounces since 2021.
The global silver deficit is anticipated to expand to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025, even with a 2% decrease in overall demand. Industrial silver fabrication is projected to decline 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 increase by 18%, bolstered by a resurgence in US investment demand. Total global supply is anticipated to decrease by 2%, which may lead to tighter market conditions even with enhanced liquidity in London.
Silver prices are currently 35% lower than their peak of $121.6 per ounce recorded in January, subsequent to the significant rally observed in 2025. Technically, silver is experiencing short covering, evidenced by a 1.78% decline in open interest to 20,056 contracts, alongside a price increase of Rs 527. Support is positioned at Rs 209,930, with an additional level at Rs 208,670, whereas resistance is observed at Rs 213,220. A sustained move above this resistance could push prices toward Rs 215,250.
