Silver’s relentless slide has pushed the metal to $64.09 an ounce, a fresh low that caps a monthly decline of nearly 16 per cent. The losses accelerated on Friday, with the precious metal shedding another 2.6 per cent as restrictive signals from the US Federal Reserve overwhelmed any positive sentiment from the recent US–Iran peace deal. At nearly 47 per cent below its 52-week peak of roughly $122, silver now finds itself caught between a macro-driven sell-off and a physical market that is tightening at an extraordinary pace.
The immediate culprit is monetary policy. The Fed has held its benchmark rate steady at 3.50–3.75 per cent, but nine policymakers now see at least one rate increase before year-end. Markets are pricing in roughly a 70 per cent probability of a hike by September. Higher borrowing costs raise the opportunity cost of holding a non-yielding asset like silver, and the dollar has surged as investors seek a safe haven amid lingering geopolitical uncertainty. Even the prospect of normalised shipping routes through the Strait of Hormuz has done little to stem the outflow from precious metals.
Yet behind this price weakness lies a supply story that is growing more extreme by the month. The Silver Institute projects a global deficit of 46.3 million ounces in 2026, marking the sixth consecutive year of shortfall. Cumulative shortfalls since 2021 now exceed 760 million ounces, draining above-ground inventories at an alarming rate. Comex warehouse stocks have fallen by roughly 75 per cent from their 2020 peak to just 88 million ounces — the physical metal that is actually deliverable against futures contracts is becoming scarce. Mine output remains constrained because silver is primarily a by-product of copper and zinc mining, limiting any rapid supply response.
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Demand patterns are also shifting beneath the surface. The solar industry, once a key driver of silver consumption, is actively reducing the metal’s content per cell to cut costs. This year, the photovoltaic sector is expected to consume roughly 151 million ounces, a 19 per cent drop from 2025. But new sources of demand are emerging rapidly. Data centres and artificial-intelligence infrastructure require silver for high-efficiency electrical components and thermal management systems, with global IT power capacity reaching nearly 50 gigawatts last year. Electric vehicles are also adding to consumption — a typical EV uses 25 to 50 grams of silver, more than 70 per cent higher than a conventional internal-combustion car, with additional metal going into battery management systems and charging infrastructure.
Analysts remain broadly optimistic despite the recent carnage. A Reuters consensus forecast puts the average silver price for 2026 at $79.50 an ounce, while Citigroup has set a second-half target of $110, citing persistent physical scarcity. J.P. Morgan maintains an annual average of $81, supported by the same structural deficit narrative. The current gold‑silver ratio of 61.7 also points to moderate undervaluation, historically a precursor to mean-reversion rallies. On the charts, support lies at $61.02 and then $54.46, with the first major resistance at $71.80 — a level that now seems distant but could be tested swiftly if macro headwinds ease and the underlying supply deficit reasserts itself.
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