Kedia Advisory – Silver prices edged up by 0.47% to settle at ₹105,885, supported by softer U.S. economic data and heightened geopolitical tensions. The U.S. Producer Price Index (PPI) for May rose only 0.1%, below the forecasted 0.2%, while jobless claims remained at an eight-month high and continuing claims hit their highest level since November 2021. These indicators pointed toward a cooling labor market, boosting expectations for a Federal Reserve rate cut as early as September. Traders now price in 50 basis points of cuts in 2025, with an 80% probability for a September cut and a potential second cut in October. On the fundamentals front, the silver market is projected to post a deficit for the fifth consecutive year in 2025.
While global silver demand is expected to hold at around 1.20 billion ounces, industrial usage continues to be the primary demand driver, forecasted to reach over 700 million ounces for the first time due to robust growth in green technologies. Physical investment is also expected to rise by 3%, particularly in Europe and North America, though jewelry demand is forecasted to drop by 6%, led by reduced Indian consumption.
Technically, silver is in a short-covering phase, with open interest falling by 7.68% to 17,885. Prices gained ₹493. Support is now seen at ₹104,430, with further downside potential to ₹102,975. Resistance is at ₹106,915, and a breakout could lead to a test of ₹107,945.
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