Silver yesterday settled down by -1.26% at Rs 184787 as the US dollar strengthened following a stronger-than-expected nonfarm payrolls report, fuelling expectations that the Federal Reserve could raise interest rates at its policy meeting next month. The US economy added 165,000 jobs in October, significantly surpassing market expectations of 65,000. Concurrently, the unemployment rate unexpectedly declined to 4.1%, and prior employment figures were revised upward by a total of 84,000. Further reinforcing the hawkish outlook, average hourly earnings increased by 0.4% against forecasts of 0.3%. Renewed gains in crude oil prices added to inflationary concerns. However, silver rose more than 6% for the week, driven by broader safe-haven demand following a Democratic victory in the US midterms.
Meanwhile, New York Fed President John Williams emphasised that inflation continues to be elevated and needs to revert to 2%, highlighting the pressures stemming from energy prices influenced by the US conflict with Iran and increasing IT expenses due to AI investments. In addition, Perth Mint reported a 36% decline in silver sales for October, totalling 388,536 ounces, which represents a decrease of approximately 63% compared to the same month last year. On the fundamental front, London vault holdings reached 28,985 tonnes valued at $56.6 billion at the end of September 2026, representing a 1.95% monthly increase across approximately 966,175 silver bars.
The silver market is poised to experience its sixth consecutive year of structural deficit, with 762 million troy ounces withdrawn from stocks since 2021, thereby heightening the risks associated with liquidity squeezes. Meanwhile, prices have declined by 35% from January’s peak of $121.6 an ounce, following a remarkable 147% increase in 2025, largely fuelled by retail purchasing activity. Metals Focus estimates that 28% of the 884 million ounces held in London vaults at the end of March were unencumbered and available to support liquidity, an increase from a historic low of 17% in September. The global silver market deficit is anticipated to expand to 46.3 million ounces in 2026, up from 40.3 million in 2025.
This shift occurs as a 2% decrease in total demand, which includes a 3% reduction in industrial fabrication reaching a four-year low, is overshadowed by an 18% increase in demand for coins and bars, coupled with a 2% decline in total global supply. From a technical perspective, the market is experiencing new selling pressure, as open interest increased by 0.75% to reach 16826, while prices declined by Rs 2353. Silver is currently supported at Rs 182820, with potential downside testing toward Rs 180850. Resistance is identified at Rs 186520, and a breakthrough above this level could lead to a test of Rs 188250.
