Silver Climbs as US Inflation Data Reduces Fed Hike Fears
Silver prices saw a solid gain on Wednesday, closing up 0.97% at ₹225,877. The rally was driven by softer-than-expected US inflation data, which eased concerns about an aggressive Federal Reserve rate hike in October. The US PCE price index rose just 0.3% in August, below expectations of 0.4%, while the core PCE increased 0.2%, against forecasts of 0.3%. As a result, markets now see only a 38% chance of an October rate hike, down from 51% before the data, though December hike expectations remain near 89%. Despite this, Treasury yields stayed near multi-decade highs amid worries about persistent energy-driven inflation.
Meanwhile, US weekly jobless claims fell by 1,000 to 197,000, underscoring the labor market’s resilience. Fed officials offered mixed views, with Michael Barr supporting further hikes, while Beth Hammack pointed to high energy prices, AI investment, and government debt as factors behind elevated long-term yields. John Williams suggested another rate hike by year-end remains reasonable.
On the silver front, London vault holdings stood at 28,213 tonnes at the end of July, up 0.5% month-over-month and valued at $52.7 billion. The global silver market is heading for a sixth straight year of structural deficits, with 762 million ounces drawn from stocks since 2021. The deficit is expected to widen to 46.3 million ounces in 2026 from 40.3 million in 2025, despite a 2% decline in total demand due to weakening industrial and jewelry consumption.
Technically, silver is under short covering, with open interest down 4.61% to 16,584 contracts as prices gained ₹2,171. Support is seen near ₹224,295, with a break below that level potentially exposing ₹222,715. Resistance lies at ₹227,175, and a sustained move above could push prices toward ₹228,475.