Silver prices extended their decline on the Multi Commodity Exchange on Friday, with the white metal coming under pressure as a stronger US Treasury yield and firmer inflation data raised concerns over the Federal Reserve's interest-rate path. Investors are also tracking global demand signals and the outlook for monetary easing.
Around 11 am on Friday, MCX silver September futures were trading at Rs 2,39,931 per kg, down by Rs 720, or 0.3%, from the previous close of Rs 2,40,651. The contract moved between an intraday high of Rs 2,40,271 and a low of Rs 2,39,049.
Earlier in the day, the white metal declined more than Rs 1,600 from its previous close. From the Rs 2,46,597 closing level on August 21, the metal has shed about Rs 7,500 at Friday's intraday low, highlighting the sharp correction over the past five sessions.
US Yield, Inflation Data Weigh On Silver
The 10-year US Treasury yield edged higher to 4.65% as investors assessed fresh economic data for clues on the Federal Reserve's next policy move.
The US personal consumption expenditures price index, the Fed's preferred inflation gauge, rose 0.2% month-on-month in July, above expectations of 0.1%. Annual inflation accelerated to 3.7%, compared with forecasts of 3.6%.
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Core PCE inflation increased 0.2% month-on-month and 3.3% year-on-year, in line with expectations. Consumer spending and personal income also came in slightly above forecasts.
Higher yields can weigh on non-yielding assets such as silver by increasing the opportunity cost of holding precious metals.
China Demand Playing as Support
Despite the recent correction, demand indicators remain supportive. Chinese imports of silver-bearing ores jumped 62.5% year-on-year in June to 219,000 tonnes, pointing to firm raw-material demand.
The near-term direction of silver is likely to remain sensitive to US inflation data, Treasury yields and evolving expectations around the Fed's rate path.
Technical Outlook
MCX silver price continues to face profit-booking after the recent rally toward higher levels.
“The broader structure remains constructive, with price holding above the 20/50/100/200-day EMA, although the near-term momentum has weakened,” said Ponmudi R, CEO, Enrich Money.
According to him, the immediate resistance for silver prices is at Rs 2,44,000 – Rs 2,45,000, followed by Rs 2,48,500 – Rs 2,50,000. Immediate support is at Rs 2,40,000 – Rs 2,39,000, followed by Rs 2,36,000 – Rs 2,35,000.
“RSI at 55.96 remains in positive territory but has moderated from recent highs, indicating cooling momentum. Bias remains cautiously negative in the near term, with prices needing to reclaim and sustain above Rs 2,45,000 to regain upside momentum, while a decisive break below Rs 2,39,000 could resume the corrective move toward Rs 2,36,000 – Rs 2,35,000,” said Ponmudi R.
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