Silver selloff seems overdone, says Mirae Asset Sharekhan; here's why

The crude oil/silver ratio has fallen through the crucial support around 58, which means silver remains vulnerable to rise in oil prices.

Disclaimer: This article is written by Praveen Singh, head of commodities at Mirae Asset Sharekhan. Views expressed are his own. Readers' discretion is advised.

 

Spot silver has been under tremendous pressure since it breached the crucial support around $58.60 on October 14. Numerous recovery attempts have been rebuffed around this level. The white metal fell more than $3 on October 22, losing 5.33 per cent to trade at $54.90, its lowest since July 17, as oil prices jumped. 

 

Geopolitics and oil

Highly volatile crude oil prices surged more than 3 per cent on October 22 on dwindling hopes of a US-Iran deal, as US President Trump denied talks with Iran. A drone attack on Aramco’s Shaybah field on October 21 killed two people, which amplified supply worries.

 

 

Although crude oil flows through the Middle East have topped pre-war volumes, concerns over escalation of US-Iran tensions, steep crack spread, low SPR Reserves and lingering uncertainty over oil flows continue to support oil prices.

 

Brent crude oil futures jumped to $112.68 on Thursday, the highest since May, and were up more than 3 per cent for the day.    

 

ETFs and COMEX inventory

Total known global silver ETF holdings rose to 805.76 Moz, the highest since March 25 as net inflows increased 5 Moz (65 Tons) since October 15. This is a healthy development for the metal as holdings had been hovering around 800 Moz in October, contrary to huge inflows into the gold ETFs. However, overall, ETFs currently hold 64 Moz (1991 tons) less silver, down 7.36 per cent YTD, as compared with the end of last year. ETFs have seen a net outflow of 26 Moz (809 tons) since the beginning of the Iran war. 

 

Registered COMEX silver inventory at 103.33 Moz is down ~49 per cent from the cycle peak of 201 Moz seen in September 2025.

 

China’s silver inventory

Shanghai Futures Exchange on warrant daily stock total stands at 1368 tons, down 8.25 per cent from the cycle peak of 1491 tons seen on September 30. However, silver stocks, as they surged sharply in the last seven months, are up 441 per cent from the cycle low of 252 tons reached on March 3.    

 

One-month lease rate

One-month LBMA lease rate at 0 per cent shows ample float at the LBMA warehouses; hence, has bearish implications for the metal.

 

India’s silver imports likely to rise

India’s silver imports are expected to pickup after the government eased restrictions. Bloomberg reported traders and bank dealers have received quotas through permits covering up to 6000 tons of silver. These permits will be valid for six months. India had introduced new licensing requirements in May to restrict imports of the metal to cut down deficit. India imported 7000 tons of silver in 2025.

 

As more metal gets imported into the country, silver premium has softened.

 

US Dollar Index and yields

The US Dollar Index, which rose to 102.95 on October 14 in the wake of hotter-than-expected US CPI data for September, has been consolidating around in the 101.50-102 range. The Index, at the time of writing was hovering around 101.87, up 0.06 per cent for the day.

 

US yields slid on Thursday. Two-year Treasury yieds were noted at 4.69 per cent, down 2.29 per cent for the day, and down 5.44 per cent from the cycle high of 4.94 per cent seen on October 14. 10-year yield was at 5.01 per cent, down over 2 per cent.

 

October Fed rate hike probability

Traders assign a probability of merely 7 per cent to the event of the Fed hiking rates at its October 28 meeting.

 

Outlook

Crude oil/silver ratio has fallen through the crucial support around 58, which means silver remains vulnerable to rise in oil prices.

 

Although intrinsic fundamentals of the metal are not so encouraging, selloff in silver, as in case of gold, seems to be somewhat overdone as yields and dollar fell. Trend selling is weighing heavily on the metal. A decisive breach of support around $54.50 could take the metal to $48-$50 mark. Resistance is seen at $59.