Silver: Surging oil prices weighing on the metal
Silver price performance:
At the time of writing this article, spot silver was trading nearly 0.5 per cent lower at $85.31. The white metal surrendered its intra-day gains of nearly 3 per cent as crude oil prices rose once again on Middle East supply concerns, which in turn boosted the Dollar Index.
The MCX May contract, at ₹268,630, was up by 0.05 per cent.
In the week ending March 6, spot silver posted a weekly loss of 9.85 per cent as it settled at $84.54.
Precious metals continue to trade largely inversely to oil prices as rising oil prices are boosting the US Dollar Index on safe haven demand. The US being energy independent and a net petroleum exporter in relatively in a better position as compared with its peers – especially those who are energy importers.
Geopolitics watch:
Iran told its regional intermediaries that any ceasefire would depend upon the US guaranteeing that there would not be any attacks by Israel/US in future. The Islamic Republic also wants to preserve its right to Uranium enrichment.
Iran’s new Supreme leader Maztaba Khamenei in his first message said that the Strait of Hormuz should stay closed and warned that other fronts may be opened if the war persists. He asserted that Iran would continue to attack Gulf.
IEA’s SPR oil release plan:
US Dollar Index and yields:
Long-term bonds under pressure: Surging energy prices are stoking concerns about spending amid already strained fiscal situations, which is weighing on the bonds. The 30-year US yields rose to 4.9 per cent — highest in a month.
The US may seek additional funding of as much as $50 billion to meet the costs of war. It is being estimated that the US is incurring an expense of nearly $1 billion per day in its war against Iran.
Europe is planning to ramp up defence spending and provide energy cost relief support.
China’s 30-year bond yields have risen to 2-year high on inflation worries.
At the time of writing, the US Dollar Index at 99.62, was up around 0.40 per cent. Two-year US yields hardened by 5 bps to 3.70 per cent, while ten-year US yields at 4.24 per cent, were up by 1 bps.
Fed rate cut odds:
ETF and COMEX inventory:
Total known global silver ETF holdings have been coming down since the war started. Silver ETFs currently hold 817.53 MOz, down nearly 5.30 per cent YTD.
Registered COMEEX silver inventory at 78.34 MOz is at the lowest since November 2023. The registered silver stock at COMEX warehouses has slumped by 61 per cent from the record peak of 201 MOz reached in September 2025.
LBMA lease rate:
One-month LBMA lease rate at 0.90 per cent has eased sharply from over 6 per cent rate seen in the beginning of February.
Data roundup:
US data released on Thursday were slightly negative for the yellow metal. January trade balance came in at -$56.50 billion vs the estimate of -$66 billion. Both continuing claims and initial jobless claims fell from their prior levels. Housing starts rose to 1487K in January Vs the estimate of 1341K, though building permits at 1376K trailed the estimate of 1410K.
Upcoming data:
Key US data on tap in near term include Feb. real personal spending, February PCE Price Index, Q4 GDP, University of Michigan Sentiment and inflation expectations, JOLTs job openings (all on March 13), Feb. industrial production, Feb. PPI (March 18) and Philadelphia Business Outlook (March 19).
Investors will also monitor UK’s monthly GDP and monthly job report to be released on March 13 and March 19 respectively.
Silver price outlook:
Oil prices are expected to remain high until a concrete positive solution to open the Strait of Hormuz emerges.
Until then dip buying in oil prices will keep the upside in silver contained.
The US Federal Reserve may not cut rates anytime soon. The Central Bank, despite disastrous February nonfarm payroll report, may wait for more clarity on employment front as bad weather played a truant in February. The weather has been one of the key factors adversely affecting the US labour market.
Spot silver is expected to range trade and is expected to be highly choppy and volatile due to gyrations in oil prices and developments in the Iran war.
The expected short-term range is $80 (Rs 252,000)-$92 (Rs 290,000). The Dollar Index moving above the resistance zone of 100-100.40 may see the metal extending its decline.
In that case, supports at $75 (₹236,000)/$70 (₹220,000) will come into the focus. Resistance is at $92 (₹290,000) /$96 (₹302,000).
It is advisable to sell into rallies with strict stoploss and proper risk management due to high volatility.
Disclaimer: This article is by Mohammed Imran, research analyst. Mirae Asset Sharekhan. Views expressed are his own.