Silver's Two-Sided Squeeze: India Unlocks 6,500 Tonnes While Funds Head for the Exits

India has cleared roughly 6,500 tonnes of silver imports for the next six months, Reuters reported yesterday, citing four dealers. The approvals are meant to keep supply flowing ahead of the festive shopping season and could ease local shortages — but they have done nothing so far to lift the international price.

The distinction matters for the physical market. On 13 October, reports emerged of an accelerated application channel for new silver import licences, effective from 15 October; that measure set no volume. The latest approvals go further, fixing a concrete framework for possible shipments. Simplified paperwork widens access to licences; the tonnage now authorised gives that access a defined ceiling. Either way, the effect is on regional availability, not on global supply.

Whether the extra import room meets real buying is another question. Demand ahead of the season is muted, according to Reuters, so the approved volume should not be read as an equivalent surge in consumption — it creates headroom first. The next test is the Indian festive calendar: Dhanteras falls on 6 November, with Diwali on 8 November.

Positioning thins to a two-year low

On the international market, other forces dominate. Goldman Sachs reported today that professional investors have retreated sharply from silver futures, leaving net long positions at their lowest level in two years. The worry over prolonged high US rates is landing on an already weakened book. A short-term countermove is possible, the bank reckons, but a durable recovery lacks convincing catalysts.

Managed funds sold a net $2.2 billion of silver futures within three weeks, according to Goldman strategist Robert Quinn, cutting their remaining net long to about $1.7 billion. Quinn also points to weakness in the AI data-centre and photovoltaic themes. Even a softer dollar failed to steady the metal, so the drag runs deeper than the usual currency effect: several trends that previously lent support no longer do.

Between 13 and 20 October the dollar index shed 0.5%, yet silver still fell 2.6%. Over the same stretch, skew toward put options reached its highest level in a year — a sign of how defensive investors have become. Quinn sees the crowded bet on falling prices as the precondition for a tactical rebound, though he explicitly draws no lasting turnaround from it.

Oil keeps the rate scare alive

Inflation fear is doing the heavy lifting today. Rising energy costs are reinforcing expectations that the Federal Reserve may hold rates high for longer or hike again, and higher rates weigh on a metal that pays no yield. CME FedWatch put the priced-in probability of another increase by year-end at 89%, while markets expected no change at the 27–28 October meeting. A pause, then, would not equal monetary relief; what counts for silver is whether the prospect of later hikes persists. Upcoming US labour-market and inflation data, along with Fed commentary, stay in focus.

Technical reads are cautious too. IG warns that a sustained break below $56 an ounce could extend the downtrend, with the next support at the monthly pivot of $54; beneath that, the analysts flag a possible target zone of $50 to $49.42. These are scenarios, not firm price targets.

For investors, the key split is between a short-term bounce driven by short-covering and a genuine improvement in the backdrop. Goldman Sachs sees the latter as possible on an easing of tensions around the Strait of Hormuz. As long as high oil prices shape rate expectations, any countermove remains fragile, in Quinn's view — and India's import clearance, whatever it does for local supply, has yet to offset that pressure.