Silver witnessed a significant 2.46% decline, settling at 76168, influenced by an increase in US bond yields, which boosted USD demand and triggered profit-taking. Federal Reserve Chair Powell's statements about potential policy tightening contributed to a shift in market sentiment. Traders, initially confident that the rate-hike cycle was over, are now pricing in a 70% chance of a U.S. central bank rate cut by March, according to CME's FedWatch Tool.
Data highlighting easing inflationary pressures and a potentially declining labour market support the expectation of a rate cut. Eurozone inflation dropping to 2.4% in November adds momentum to bets that the ECB will expedite interest rate cuts. Geopolitical concerns, such as the Israeli military's ground offensive in Gaza, also impacted market dynamics. Furthermore, silver prices were influenced by concerns over industrial silver supply against robust demand. The Silver Institute projects a 2% global mined silver production decrease in 2023, mainly due to lower output from key producers Mexico and Peru. Simultaneously, increased investments in solar panels, power grids, and 5G networks are driving an 8%-10% forecasted rise in silver demand.
From a technical standpoint, the market is undergoing long liquidation, with a 28.26% drop in open interest to 18139 and a price decrease of -1919 rupees. Silver finds support at 75200, with a potential test of 74240 below, while resistance is anticipated at 77835, and a move above could lead to testing 79510.
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