Silver is trading at $74.54 per ounce, down roughly 4% from the previous session, as two powerful forces pull the market in opposite directions. A structural supply deficit is building a floor under prices, while a hawkish Federal Reserve nominee and escalating tensions in the Persian Gulf are piling on the pressure from above.

The Warsh Factor and a Blocked Confirmation

Kevin Warsh, the nominee to chair the Federal Reserve, has injected a fresh dose of uncertainty into the precious metals complex. Testifying before the Senate Banking Committee, Warsh declared the Fed had lost its credibility and called for a “regime change” — one that prioritizes aggressive inflation fighting and reduces reliance on bond purchases and forward guidance.

For non-yielding assets like silver, that hawkish rhetoric translates directly into headwinds. Markets are now pricing in no rate cuts through 2026, a sharp reversal from earlier expectations of at least two.

But Warsh’s path to confirmation is far from clear. Republican Senator Thom Tillis has announced he will block the vote, demanding the Justice Department drop its investigation into Jerome Powell. Without Tillis, Republicans lack the necessary majority, and all Democrats are expected to vote against.

Hormuz: A Geopolitical Wildfire

The blockade of the Strait of Hormuz is adding another layer of complexity. Tehran continues to severely restrict international shipping, and reports this week indicate Iranian forces fired on commercial vessels. The US has responded by blocking Iranian ports.

The resulting surge in oil prices is anchoring inflation expectations higher, which in turn pushes up the dollar and bond yields — a toxic combination for silver. Since the standoff began, the metal has lost more than 15% of its value and now sits below the $78 mark.

Plans for a second round of peace talks have collapsed, leaving the market with no clear off-ramp from the geopolitical turmoil.

The Deficit That Won’t Quit

Despite the macro headwinds, the physical market tells a very different story. The Silver Institute projects a sixth consecutive annual supply deficit in 2026, with the gap reaching 67 million ounces. From 2021 through 2026, the cumulative shortfall is expected to total roughly 820 million ounces.

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Global mine production is edging up to its highest level in a decade, but that marginal increase is nowhere near enough to meet demand. Industry is being forced to draw down above-ground inventories.

On the demand side, the picture is shifting. The solar industry is using less silver per panel thanks to efficiency gains, but that is being offset by growth in data centers, artificial intelligence infrastructure, and automotive electronics. Physical investment is expected to jump by a fifth to a three-year high, as Western investors seek refuge in the metal amid macroeconomic uncertainty.

Jewelry and silverware, however, are feeling the pinch from high prices, with analysts forecasting a double-digit decline in demand.

A Rally Partially Erased

Silver had staged a remarkable recovery from its low around March 23, surging 31% to nearly $80 per ounce — outperforming gold. But the current correction is eating into those gains.

The gold-silver ratio has climbed to 63.03, up from 60.99 on Wednesday, signaling that gold is holding up better. Year-to-date, silver is still up roughly 5%.

Analyst Targets: Optimism Below the Surface

Major banks remain constructive on silver’s medium-term outlook, despite the current weakness. A robust gold price and tight physical liquidity in London are seen as limiting downside risks.

• J.P. Morgan forecasts an average price of $81 per ounce for 2026.
• Commerzbank expects a rise to $90 by the end of 2026, with further potential to $95 by the end of 2027.

What’s Next

In the near term, the direction of silver hinges on US PMI data and initial jobless claims — unless the Persian Gulf delivers another escalation. The structural deficit provides a floor, but until the Fed’s path becomes clearer and geopolitical tensions ease, silver’s rally will remain a fragile one.

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