After a recent rise fuelled by Democratic gains in the US midterm elections and expectations of a de-escalation in the US-Iran war, which caused a steep decrease in crude oil prices and soothed inflation fears, silver finished 0.32% lower at Rs. 187,140 as profit booking appeared. However, stronger-than-anticipated economic indicators from the United States constrained potential declines, as initial jobless claims fell by 6,000 to 189,000, contrasting with forecasts of 196,000. Additionally, nonfarm business productivity rose by 3.6% in the third quarter of 2026, marking its most robust growth since the third quarter of 2025.
Markets are currently reflecting a 79% likelihood of a Federal Reserve rate increase in December, which is exerting pressure on non-yielding precious metals in anticipation of the US employment report. In October, Perth Mint silver sales experienced a month-on-month decline of 36%, totalling 388,536 ounces. This figure represents a year-on-year decrease of approximately 63%, indicative of diminished investment demand in the context of sustained high interest rates. Meanwhile, the global silver market is anticipated to experience its sixth consecutive annual deficit, with the shortfall expected to expand to 46.3 million ounces in 2026, up from 40.3 million ounces in 2025.
Cumulative inventory withdrawals have reached 762 million ounces since 2021, underscoring a persistent structural tightness despite enhanced market liquidity. Total global silver demand is projected to decrease by 2%, driven by a 3% reduction in industrial fabrication, which has reached a four-year low. This decline is somewhat mitigated by an 18% rise in demand for coins and bars. Global supply is projected to decrease by 2% in 2026, which will further reinforce the existing supply-demand imbalance. Silver holdings in London vaults rose by 1.95% month-on-month, reaching 28,985 tonnes at the close of September, suggesting a modest enhancement in the availability of inventories.
Technically, the market is experiencing long unwinding, as open interest has decreased by 2.58% to 16,701 contracts, accompanied by a price decline of Rs. 595. Silver is currently encountering support at Rs. 184,230; a decline below this threshold may lead prices to test Rs. 181,330. Conversely, resistance is established at Rs. 190,500, and a sustained movement above this level could facilitate a recovery toward Rs. 193,850.
