Silver prices fell toward $74 per ounce on Tuesday, reversing gains from the previous session as heightened uncertainty in the Middle East and persistent inflation concerns weighed on sentiment. According to Kotak Securities, silver was trading 2.15% lower at $76 per ounce in the US spot market, while in India's Multi Commodity Exchange (MCX), silver futures were down 0.77% at ₹2,74,508 per kilogram at 4:55 pm. The precious metal continues to remain under pressure as an asset class amid multiple headwinds affecting investor sentiment.
Markets reacted cautiously to President Donald Trump's remarks hinting at possible progress toward a peace agreement with Iran, with investors remaining skeptical that a resolution to the crisis was near. As per multiple reports, President Trump said he called off a planned strike on Iran scheduled for Tuesday after appeals from Saudi Arabia, Qatar, and the UAE, adding that the Gulf nations believed a deal with Tehran acceptable to Washington was still within reach. However, precious metals have been under pressure since the outbreak of the Middle East conflict, as surging oil prices intensified inflation fears and strengthened expectations for further central bank interest rate hikes.
Rising US inflation has also prompted traders to further scale back expectations for Federal Reserve rate cuts this year, while increasing speculation that the Fed could still deliver a rate hike before year-end. According to Kotak Securities, silver is under pressure due to inflation concerns, firm crude oil prices and weak Chinese economic data. The brokerage noted that crude oil prices climbed to a three-week high, pushing global bond yields higher and fuelling concerns over sticky inflation. Weak economic data from China further weighed on the metal due to fears of softer industrial demand from the world's largest consumer of metals.
For MCX Silver July futures, Kotak Securities identified immediate support at ₹2,71,601 per kg, followed by ₹2,68,635. The brokerage warned that a breach below these levels could drag prices lower towards ₹2,59,035. On the upside, resistance for MCX Silver July futures is seen at ₹2,81,201 and ₹2,84,167. In international markets, spot silver support is placed at $74.35 per ounce, with stronger support around $73.25. A plunge below these levels can take the metal below $70, with support seen at $69.65, while resistance levels are seen at $77.90 and $79.00.
According to Kotak Securities, traders should closely monitor crucial downside levels in both domestic and international markets. Investors are now awaiting the latest FOMC minutes and flash US PMI readings for additional signals on the outlook for monetary policy and economic conditions. These factors will be crucial in determining the metal's near-term direction and potential recovery from current pressure levels, as precious metals have been under sustained pressure since the Middle East conflict began.
