Silver supported by a weakening Dollar as oil prices retreat
Performance:
On April 14, silver prices surged to $80.85 -- the highest since March 13 -- on Iran peace hopes before erasing gains as the US Dollar stabilised.
At the time of writing this article, the white metal was trading at $78.24, down by 0.90 per cent for the day.
Geopolitics and oil:
President Trump declared on April 16 that Israel and Lebanon have agreed to a 10-day truce.
The US and Iran are considering a two-week ceasefire extension, though the two sides remain far apart on crucial issues like control over the Strait of Hormuz, Uranium enrichment and reparations.
The US blockade of the Strait entered its fourth day.
Dated Brent oil (meant for physical delivery) prices have come down sharply from their Iran war peaks but remain quite elevated (80 per cent) from pre-war levels. Even if the war is stopped now, complete restoration of oil flow will take weeks/months altogether, which means that energy prices could remain high in the foreseeable future.
Risk appetite is quite healthy as US stock indices hit record highs on Thursday. The MSCI World Index is approaching record highs.
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Dollar Index and yields:
At the time of writing, the US Dollar Index was hovering around 98.19, up by 0.15 per cent for the day. However, the Index is down 2.43 per cent from the Iran war peak of 100.64 as receding oil prices reduced the safe haven demand for the greenback.
The ten-year US yields at 4.3 per cent were up by 1.5 bps for the day, while 2-year yields at 3.77 per cent edged up by 1 bps. Two-year and ten-year yields have declined by 25 bps and 10 bps, respectively, on Iran peace hopes.
Probable Rate paths of key central banks:
Implied overnight futures suggest that the Fed can still cut rates 0.4 times by the year-end, but it is a sharp turnaround from expectations of 2+ rate cuts seen before the war began.
The Bank of England and the European Central Banks are expected to hike by 1.5 and 2.25 times, respectively.
ALSO READ: Gold eyes $5,000 amid US-Iran ceasefire hopes; analyst suggests buy on dips
ETF and COMEX inventory:
Total known global silver ETF holdings stand at 800.70 MOz, the lowest since September 2025.
ETF holdings have plummeted by 8.15 per cent from the cycle peak of 871MOz reached on December 23 and are down by 4 per cent since the Iran war began. Registered COMEX silver inventory at 76.96MOz is at the lowest in a year.
LBMA lease rate:
One-month LBMA lease rate at 0 per cent does not betray any major supply concerns.
China's silver inventory still tight:
SHFE's on-warrant silver inventory has doubled from a fresh 10-year low reached in the first week of March to 520 tons currently, but overall, inventory is still hovering around a decadal low.
Silver inventory at the Shanghai Gold Exchange is also at a decadal low. Outlook: $78.07/$75.
ALSO READ: Brent stays elevated on physical supply stress; easing seen by May: Analyst
China to ban sulfuric acid:
China’s upcoming ban on sulphuric acid exports from May 1 is expected to impact copper production, indirectly tightening silver supply by 2-3 per cent.
Silver: sixth consecutive year of deficit
According to the Silver Institute’s latest survey, the silver market is expected to see its sixth consecutive annual deficit in 2026; the expected deficit this year is 46.3 million ounces. (This article is by Praveen Singh, head currencies and vommodities at Mirae Asset Sharekhan. Views expressed are his own.)