Silver prices faced a decline of -0.61%, closing at 70,982, primarily due to the strength of the US dollar. The US economy's resilience and expectations of the Federal Reserve maintaining high borrowing costs boosted the dollar index, which rose over 0.5% to its highest point since March. Recent data also supported the belief that the Federal Reserve will continue to raise borrowing costs.
In contrast, the European Central Bank (ECB) delivered what many analysts consider the final rate hike in the current cycle. US retail sales for August exceeded expectations with a 0.6% month-on-month increase, and producer prices saw the most significant rise since June 2022, increasing by 0.7%. Strong services PMI and labour market data suggesting tightness fueled concerns that inflation might persist, increasing the likelihood of another rate hike by the US central bank in November. High interest rates not only make the dollar more attractive but also elevate the opportunity cost of holding non-interest-bearing assets like silver. Moreover, elevated borrowing costs negatively impact silver's demand for industrial uses, particularly in solar panels and sustainable energy generation methods, as reflected in the decline of solar energy equity indices.
From a technical perspective, the silver market witnessed fresh selling, with a 9.55% increase in open interest, reaching 19,929. Prices dropped by -437 rupees. Silver's support level is at 70,255, with a potential test of 69,535, while resistance is expected at 71,500, and a breakthrough could lead to testing 72,025.