Silver Traders Brace for India Tax Decision and Middle East Tensions

Silver traders are navigating dual pressures this week: a potential tax change in India and escalating tensions in the Middle East. The COMEX front-month silver contract closed Friday at $60.71 an ounce, below its 50-day and 200-day averages of $65.51 and $70.83, respectively. While there was a slight rebound in Asian trading on Monday, the broader outlook remains weak after a 6% decline last week.

The most immediate concern is India's GST Council meeting on Wednesday, which may end a seven-year tax exemption on gold, silver, and platinum imports. Removing this exemption would increase costs for bullion banks and state agencies, likely raising prices for fabricators and retail buyers. India has already reduced silver import duties from 6% to 15% in May, leading to an 8.81% drop in shipments between April and August.

Meanwhile, geopolitical tensions in the Middle East are boosting demand for safe-haven assets. Reports of a Yemeni government offensive against Houthi militias, backed by Saudi Arabia, and strikes near the Bab-el-Mandeb strait have heightened concerns over supply risks. Analyst Manoj Kumar Jain notes that silver must break above $62.40 to signal further upside, while $59.10 is a key support level. The stalled Iran talks add to the uncertainty, advising caution against speculative positions.

On the monetary front, US Treasury yields have eased slightly, providing some relief for silver. A softer-than-expected US jobs report has reduced the likelihood of a rate hike in October, but the Chicago Fed's Austan Goolsbee has left all options open. JPMorgan forecasts silver prices to average between $60 and $65 per ounce, citing sensitivity to real interest rates. The next key developments include US services-sector data and Fed meeting minutes, both due Wednesday.