Silver Extends Selloff Toward $56.50 as Dollar Rally, Iran Détente and Tech Liquidation Squeeze Out Safe-Haven Bid

Silver slides to $56.50 as strong dollar, rate hike expectations, and fading geopolitical risks overwhelm bullish supply deficit narrative; core PCE data Friday could trigger further losses.

Silver traders are bracing for Friday’s core PCE inflation report after the white metal accelerated its decline on Thursday, sliding toward $56.50 following a fresh 2025 low of $58.75 the previous session. The metal now sits at its weakest level since late last year, caught in a perfect storm of macro headwinds that have overwhelmed its bullish supply narrative.

The US Dollar Index has surged past 101.60, its strongest reading since May 2025, making dollar-priced commodities more expensive for international buyers and curbing physical demand. Underpinning the dollar’s rally is Federal Reserve Chair Kevin Warsh’s emphatic prioritisation of price stability. The CME FedWatch Tool now prices an 85.5% probability of a rate hike by December 2026 — a punishing backdrop for a zero-yield asset like silver, which competes directly with interest-bearing instruments.

Adding to the pressure, the interim US-Iran peace agreement signed on June 19 has erased much of the geopolitical risk premium that had supported precious metals as safe-haven hedges. Meanwhile, a sharp selloff in the technology sector prompted investors to liquidate silver and gold positions to cover losses in equity portfolios, accelerating the downward spiral. Although some physical buyers have stepped in locally, the dominant force at the international level remains selling.

Chart watchers point to $56.50 as the next critical support. A break below that level could open the door to $55.00, while only a recovery above $60.48 would brighten the near-term technical picture. The metal is trading well below its 50-day moving average. Friday’s PCE data — economists expect core inflation of 3.4% year-on-year — will be the next major catalyst. A hotter-than-expected reading would likely reinforce rate hike expectations and heap further pressure on silver.

The short-term pain does not erase the structural case. The World Silver Survey projects a sixth consecutive annual supply deficit in 2026, totalling 46.3 million ounces, driven by insatiable industrial demand from solar panels, electric vehicles and electronics. Mine output remains constrained, ensuring the fundamental imbalance persists. For now, however, macro forces hold the whip hand — and the timeline for the deficit to reassert itself depends entirely on when those headwinds abate.