Silver settled 0.17% higher at Rs. 1,85,100, experiencing a slight recovery on short covering following recent declines influenced by a stronger US dollar and robust nonfarm payrolls data, which bolstered expectations of a possible Federal Reserve interest rate increase in December. The US economy added 165,000 jobs in October, surpassing market expectations of 65,000, while unemployment unexpectedly declined to 4.1%. Average hourly earnings rose by 0.4%, surpassing the anticipated 0.3% increase, while prior employment data was adjusted upward by a total of 84,000, reinforcing a hawkish perspective.
However, silver gained more than 6% during the week, bolstered by safe-haven demand following the Democrats’ victory in the US midterm elections and a shift in investor focus away from technology stocks. New York Federal Reserve President John Williams emphasised that inflation continues to be unacceptably elevated and needs to revert to the central bank’s 2% target. In October, Perth Mint silver sales experienced a month-on-month decline of 36%, falling to 388,536 ounces from 605,408 ounces in September.
This decrease is indicative of diminished investment demand, which can be attributed to the prevailing higher interest rates. According to the Silver Institute and Metals Focus, the global silver market is projected to experience its sixth consecutive annual deficit in 2026, with the shortfall anticipated to expand to 46.3 million ounces, up from 40.3 million ounces in 2025. Global silver supply is projected to decrease by 2%, while total demand is anticipated to drop by 2% as a result of diminished industrial and jewellery consumption. Industrial fabrication is anticipated to decline by 3%, reaching a four-year low, whereas demand for coins and bars is forecasted to increase by 18%.
The market has drawn 762 million ounces from inventories since 2021, underscoring a continual structural supply tightness even in the face of enhanced liquidity. Technically, the market is experiencing short covering, as open interest has decreased by 0.36% to 16,765 contracts, accompanied by a price increase of Rs. 313. Silver is presently encountering support at Rs. 1,84,820, with an additional level of support at Rs. 1,84,540, while resistance is established at Rs. 1,85,360. A sustained move above this resistance could extend the recovery toward Rs. 1,85,620.
