Silver outlook bearish; may fall to $48 if $54.50 support breaks: Analyst

Praveen Singh of Mirae Asset Sharekhan said that silver has fallen quite sharply in the last few weeks. The white metal looks weaker than gold, as ETF flows are not inspiring.

Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.

 

Praveen Singh, head of commodities at Mirae Asset Sharekhan

 

On October 15, spot silver slumped ~6 per cent to $55.40 -- lowest since July 17 -- on inflation and rate hike worries as hotter-than-expected CPI data led to a huge selloff. Silver is down ~20 per cent Y-T-D.

 

At the time of writing this report on the night of October 15, the white metal was trading at $57, up 2.5 per cent for the day, as it tracked US bonds higher.

 

 

Geopolitics and oil:

 

IEA members have agreed to release an additional 100 mb of oil, the outstanding tranche from the target volume agreed upon in March.

 

US President Donald Trump may support a federal tax exemption on diesel.

 

Reuters reported that Trump may ease sanctions on shadow fleet vessels (used for transporting oil and gas from countries like Russia, China and Iran) to reduce global fleet rates.

 

Iran's IRGC has warned that it stands ready to answer renewed US aggression, as conflict before the midterm US election on November 3 is not ruled out.

 

Iran threatened that it is counting moments before it can attack US warships. Houthis have attacked Saudi airports 20 times in October, in which 17 people were killed, according to the Saudi-Yemen coalition.

 

Ukraine-Russia energy ceasefire is not holding. Ukraine struck a Russian oil refinery on Thursday.

 

Brent oil futures were trading steady around $106 at the time of writing, though WTI crude oil was up more than 3 per cent. 

 

Data roundup:

 

US PPI Price Index rose the most in more than four years. PPI final demand was up 1.3 per cent M-o-M (forecast 0.6 per cent, prior 0.4 per cent) in September, while it rose 6.3 per cent Y-o-Y (forecast 5.4 per cent, prior 5.6 per cent). Core PPI increased 0.7 per cent on month (forecast 0.3 per cent, prior 0.2 per cent), while it jumped 5 per cent Y-o-Y (forecast 4.4 per cent, prior 4.8 per cent). 

 

Headline retail sales for September were robust. Sales rose 0.8 per cent M-o-M versus an estimate of 0.3 per cent, though sales slowed down from upwardly revised 1.3 per cent growth in August. Retail sales control group was up 0.1 per cent M-o-M, which lagged the estimate of 0.3 per cent and the robust 1.2 per cent noted in August. Empire manufacturing surged to 25.5 (forecast 12) -- highest in almost five years -- in August from 7.6 in September. Weekly job report continued to show initial jobless claims remaining at decadal lows. Philadelphia Fed Business Outlook eased from 37.80 to 20.90 in October, Vs the estimate of 28. US PPI report showed that the impact of high energy prices is spreading to other sectors, including core goods. Some parts of the PPI feed through the PCE Price Index, Fed's preferred gauge of inflation, though elements in this report showed mixed trends. 

 

US CPI report for September turned out to be hotter-than-expected. Headline CPI rose 0.6 per cent M-o-M (forecast 0.6 per cent, prior 0.4 per cent) -- hottest since April, while it was up 3.7 per cent Y-o-Y (forecast 3.6 per cent, prior 3.4 per cent), quickest since June. Core CPI Y-o-Y came in at 2.6 per cent (forecast 2.5 per cent, prior 2.4 per cent), while it rose 0.3 per cent from a month earlier, vs the estimate of 0.2 per cent and prior 0.3 per cent.

 

ETF and COMEX inventory:

 

Total known global ETF silver holdings stand at 800 Moz, down 7.94 per cent in 2026 so far. Holdings have come off sharply from the cycle peak of 869 Moz seen on December 23 last year.

 

Registered COMEX silver inventory at 103.09 Moz is down 48 per cent from the record peak of 201 Moz seen in September last year, though inventory has risen over 37 per cent since hitting the cycle low on April 28.

 

China's silver inventory:

 

Shanghai Futures Exchange on warrant delivery stock daily total is noted at 1415 tons, down nearly 5 per cent from the cycle high of 1,490 tons seen on September 30, but overall, inventories have risen 463 per cent tons from the cycle low of 252 tons reached in March, which is bearish for the white metal.

 

China's silver imports:

 

China imported nearly 260 tons of silver in August, down 9.77 per cent M-o-M, but up ~30 per cent Y-o-Y. Overall, China's silver imports through August this year are up nearly 45 per cent Y-o-Y due to outsized imports in March and April this year.

 

One-month LBMA lease rate:

 

One-month LBMA lease rate at 0.02 per cent indicates ample silver float in LBMA warehouses, which is negative for the metal, as the historical average has been 0.3-0.6 per cent. 

 

Silver price outlook:

 

Silver has fallen quite sharply in the last weeks. The white metal looks weaker than gold as ETF flows are not inspiring. Low lease rates suggest ample inventories at LBMA warehouses. Upside in the metal is expected to be capped unless we see a new factor cropping up in the scenario.

 

A decline below $54.50 will be quite bearish for the metal. A decisive breach of this support can take the metal to $50/$48.

Support is at $54.50, while resistance is at $59/$60/$61/$63.30. It is advisable to sell into rallies with a strict stop-loss.