Silver closed last week at $76.41 per ounce, nursing a near-7% weekly loss that has left traders questioning whether the metal’s long-running bull market is finally running out of steam. The selloff, however, is no simple case of profit-taking. Beneath the surface, a structural transformation in the solar industry is colliding with Federal Reserve policy and geopolitical turmoil, creating a uniquely challenging environment for the white metal.
The Solar Revolution That Isn’t Helping Silver
The most consequential development for silver’s demand profile is unfolding in China’s photovoltaic sector. Longi, one of the world’s largest solar manufacturers, will begin mass production of copper-based solar modules in the second quarter of 2026. JinkoSolar is following suit, while Shanghai Aiko Solar Energy has already started producing silver-free cells with a capacity of 6.5 gigawatts.
The economics driving this shift are brutal for silver bulls. According to BloombergNEF, silver’s share of total solar module production costs has surged from 5% to 14% in just two years. That cost pressure has already triggered a 6% decline in PV industry silver demand in 2025, to roughly 187 million ounces. Analysts project a further 19% drop in 2026.
The transition isn’t seamless. Copper-based metallization increases assembly costs and raises durability concerns. TOPCon cells, which require high-temperature processing, remain particularly difficult to substitute. Still, the direction of travel is unmistakable — and it represents a permanent structural headwind for silver demand.
A Market Still in Deficit
Despite the solar sector’s retreat, the global silver market remains in deficit for the sixth consecutive year. Total supply is expected to reach a decade-high of 1.05 billion ounces in 2026, while recycling volumes are set to climb 7%, surpassing 200 million ounces for the first time since 2012.
On the demand side, a new force is emerging. AI data centers require silver-plated copper connectors to minimize electrical resistance and prevent overheating. This growing market is partially offsetting the solar industry’s decline, though it remains too small to fully compensate.
The Fed’s Final Act
The week’s most critical macro event arrives on April 29, when the Federal Open Market Committee concludes its two-day meeting. Markets have priced in a 99.7% probability of no rate change, according to Polymarket, and J.P. Morgan Global Research expects rates to remain steady for the remainder of 2026.
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This is Jerome Powell’s final meeting as Fed chair. Kevin Warsh takes over on May 15, introducing a layer of political uncertainty that could prove decisive for precious metals. A dovish successor would provide a powerful tailwind; a hawkish appointment would extend the pain from elevated real interest rates.
The market’s focus will be on Powell’s press conference. With University of Michigan inflation expectations jumping to 4.8% in April — the largest one-month surge in a year — any hint of openness to future rate cuts could spark a sharp rally in non-yielding assets like silver. Conversely, a reaffirmation of the current hawkish stance would keep the metal under pressure.
Geopolitical Wildcards
The ongoing closure of the Strait of Hormuz is adding another layer of complexity. Oil prices are rising, and the US Consumer Price Index climbed to 3.3% in March, its highest level since May 2024. Higher inflation typically hurts non-yielding assets, but it also raises the specter of stagflation — a scenario that historically benefits precious metals.
Technical Levels and Institutional Outlook
The gold-silver ratio currently sits at approximately 60, well below the long-term average of 70, indicating that silver has significantly outperformed gold on a relative basis. Chart support lies at $72.61, with resistance at $83.75.
Institutional forecasts remain constructive despite the correction. J.P. Morgan expects an average silver price of $81 in 2026. Commerzbank is more bullish, targeting $90 by year-end and $95 by the end of 2027. Whether those targets prove achievable depends on how the Hormuz crisis, Fed policy, and Powell’s succession unfold in the coming weeks.
Thursday brings a slate of key data releases — first-quarter GDP, core PCE, and initial jobless claims — followed by the April employment report on May 2. Strong readings would further dampen rate-cut expectations, while weak numbers could reignite hopes that the Fed’s next move might be lower after all.
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