As COMEX Delivery Demand and Structural Deficit Mount, Silver Faces Macro Crosswinds

Silver holds at $75.83 as deepening physical deficit (22M oz COMEX demand) clashes with geopolitical easing, robust US data, and sticky inflation. Industrial demand dips 3%, with key support near $70.

Silver ended last week at $75.83 an ounce, caught in a tug-of-war between entrenched physical tightness and a fresh wave of macro headwinds. The underlying story is one of deepening scarcity: the COMEX recently saw over 22 million ounces of physical silver demanded for delivery, while the Silver Institute forecasts a sixth consecutive deficit year in 2026, with the structural shortfall widening to 46.3 million ounces. Yet price action tells a more cautious tale. The metal slipped 0.49% on the week and 0.50% on Friday alone, even as the monthly picture remains positive with a 5.95% gain.

The immediate headwind comes from geopolitics. Expectations of a 60-day extension to the existing ceasefire between the US and Iran have eroded part of the risk premium that had been supporting precious metals. Silver has now pulled back 35.13% from its January 28 high of $116.89, underscoring how much of that rally was fueled by safe-haven speculation and protective positioning. Robust US economic data have added to the pressure, keeping the dollar firm and bond yields elevated—a toxic combination for a non-yielding asset like silver.

Meanwhile, the US inflation picture remains sticky. The PCE price index rose 0.4% month-on-month in April and stood 3.8% higher from a year earlier. Core PCE edged up 0.2% monthly and 3.3% annually, leaving the Federal Reserve with little room to signal early rate cuts. Higher interest rate expectations weigh on all precious metals, though silver’s dual identity as both a monetary and industrial commodity provides a partial buffer.

That buffer, however, is being tested. Industrial silver demand reached 657.4 million ounces in 2025, a 3% decline, and the World Silver Survey projects another 3% drop in 2026. Weaker demand from the photovoltaic sector is expected to overshadow gains from AI infrastructure, automotive applications, and power grid expansion. The shift in the demand mix means silver’s industrial anchor is no longer as firm as it once was, even as the overall deficit narrative remains intact.

On the futures markets, sentiment has turned cautious. COMEX silver futures extended their losses last week, and India’s MCX contracts also retreated. The pullback has been orderly so far: the close at $75.83 lies just 0.35% below the 50-day moving average of $76.09, and the relative strength index at 58.9 signals no overheating. Still, the 30-day volatility stands at a high 55.53%, leaving the market prone to sharp swings.

The divergence between the physical and paper markets could become a flashpoint. While macro factors dominate short-term price action, the squeeze on deliverable supply—reflected in the 22-million-ounce COMEX delivery request and persistently low registered inventory levels—means any renewed focus on availability could trigger a sharp reversal. The structural deficit acts as a floor, but as recent weeks have shown, it does not prevent corrections.

Technically, the key downside zone lies between $70.00 and $72.00. That band has provided support multiple times in recent months, and a clean break below it would mark a significant deterioration in the chart structure. On the upside, reclaiming and holding above the 50-day average would reinforce silver’s relative strength versus gold, which has underperformed on a monthly basis.

The week ahead will be dominated by the US jobs report due June 5, the next major input for the Federal Reserve’s June 16 meeting. A strong payrolls number would likely tighten the screws on silver by supporting the dollar and pushing rate-cut expectations further out. With physical markets tightening and macro headwinds persisting, silver remains a story of conflicting forces—one where scarcity meets skepticism, and where the outcome depends on which narrative gains the upper hand.