Silver trading guide: Buy the dips unless sentiment weakens further

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Silver: Buy the dips

Silver performance:

Silver closed at the highest six-monthly level as it closed at $36.10 on June 30.

 

On July 1, the white metal traded between $35.80 and $36.62 as it rose for the second consecutive day. However, it eased from its day's high on a recovery in the US Dollar and yields as US ISM manufacturing (June) and JOLTs (May) data were mostly upbeat.

 

At the time of writing this report, silver was trading steady at $36.16 (spot), whereas the MCX Silver September was at ₹106,682, up around 0.5 per cent on the day.

World Silver Survey:

As per the Silver Institute’s World Silver 2025 survey, the factors that underpinned precious metals prices throughout 2024 are also in force in 2025. In fact, these factors have been strengthened further by uncertainties surrounding US trade and foreign policy with the arrival of the new Trump Administration. The Survey expects the Fed to cut rates in 2025 due to the possible weakness in the US economy due to tariff uncertainty. 

The World Bank on Silver:

Per the World Bank, gold’s prospects are bullish over the next 18 months, while silver and platinum are expected to build on their recent strength through 2026.

 

The World Bank expects silver demand to remain robust, supported by the grey metal’s dual role as both an industrial input and a safe-haven asset, while heightened economic and geopolitical uncertainty could further bolster silver’s appeal among investors. Global output is projected to rise steadily in 2025, whereas recycling, which accounts for about 20 per cent of global supply, is expected to remain flat following a 6 per cent increase in 2024.

Trump Tax bill passes Senate:

On Tuesday, the US Senate narrowly passed $3.3 trillion Trump’s tax and spending cut bill with a 51-50 vote.

 

The bill, which includes provisions to raise the debt limit, cut Medicaid and other social safety net programs, and tax breaks for certain groups, will go to the House, which is expected to vote on the bill this week.

 

As the bill faces opposition from some of the Republicans, it is difficult to assess whether it can be passed in the House, which has a slim Republican majority.

ETF:

As of June 30, total known global silver ETF holdings stood at 772.80MOz, up around 8 per cent YTD. Silver ETF holdings have been up for eight weeks in a row and are at the highest level since August 2021.

COMEX silver inventory:

COMEX Silver inventory stands at 499.695MOz, down nearly 1 per cent from the record high level of 505 MOz seen on May 12.

US Senate drops excise tax from Trump's bill:

The US Senate dropped the proposed excise tax on solar and wind projects that use Chinese components. However, the bill will end subsidies for new wind and solar projects after December 31, 2027.

Upcoming data:

Today's major US data on cards include ADP employment change (June). However, the focus is mainly on the nonfarm payroll report (June) to be released on July 3. The report is likely to show a decline in hiring and an uptick in the employment rate. ISM services report, yet another crucial report, will also be released on the same day.

Silver outlook:

Spot silver is well supported by huge ETF inflows, a weakening US Dollar, and economic and political uncertainties. The US Dollar Index fell to more than a three-year low on July 1 as hit a fresh cycle low of 96.33.

 

Trump’s tax and spending bill is somewhat positive for the metal. Chinese PMIs (June) have been encouraging. US data released on Tuesday is also largely supportive of the metal. However, risk will come from tariff war headlines.

 

Buying the dips is advisable unless risk sentiments deteriorate significantly. Tariff developments ahead of the July 9 deadline will be crucial.

 

The $35 support (₹103,000) can be used for initiating long positions. Resistance is at $36.84 (₹108,700)/$37.50 (₹110,700). 

 

(Disclaimer: This article is by Praveen Singh, senior fundamental research analyst- currencies and commodities, Mirae Asset Sharekhan. Views expressed are his own.)