Silver Plunges 5% to Six-Month Low as Dollar Strength and Geopolitical Thaw Unravel Safe-Haven Demand

Silver drops 5% to near $61, erasing half from record highs, pressured by Fed rate hike bets, a surging US dollar, and fading geopolitical risks. The $60 support level is critical.

The silver market suffered another sharp setback on Tuesday, with the precious metal tumbling roughly five percent to trade near $61 an ounce – its weakest level in almost six months. The rout has now erased nearly a fifth of silver's value in the current quarter alone, putting the metal on track for its steepest quarterly decline since June 2022. From its former record high of $117, silver has shed roughly half its value.

A powerful cocktail of tightening monetary policy, a surging US dollar, and fading geopolitical risks is driving investors out of the asset. Federal Reserve Chair Kevin Warsh has doubled down on price stability, signaling readiness to raise rates further. Markets now assign an 86 percent probability to a December rate increase, while Bank of America anticipates three rate hikes in 2026. Core inflation remains stubbornly elevated at around 3.5 percent, giving the central bank little room to ease.

The hawkish Fed stance has propelled the US Dollar Index to a fresh 13-month high, making dollar-denominated silver more expensive for overseas buyers. At the same time, US Treasury yields are climbing, further diminishing the appeal of non-yielding metals. The result has been relentless selling pressure.

Geopolitical developments have added to the headwinds. The US-Iran peace agreement has calmed energy markets, with Washington suspending sanctions for 60 days and the Strait of Hormuz reopening. Daily oil flows through the chokepoint now exceed 19 million barrels, pushing Brent crude below $77. As inflation fears tied to energy shortages ease, investors are unwinding their hedge positions in precious metals, stripping silver of its safe-haven premium.

Industrial demand has offered little support. While silver remains a critical input for photovoltaic panels and AI hardware, the broad sell-off in US technology shares – led by names like Nvidia – has dragged the metal lower. The tech rout has overshadowed the physical market's fundamentals.

Technicians are watching key support levels closely. The $61.24 area, which acted as a floor in recent weeks, is under threat. A decisive break below the psychologically important $60 mark could trigger a fresh wave of selling, with the next downside target at $55 according to one set of projections. Another analyst sees a potential decline toward $58.50 if $60 gives way.

Despite the price collapse, some producers are pressing ahead. GoGold Resources reported operating cash flow of $21 million in its fiscal first quarter, with production exceeding 390,000 silver-equivalent ounces. The company continues to develop new projects unabated.

All eyes now turn to incoming US data. The government will release the PCE inflation reading on June 25, followed by core inflation figures later in the week. A hotter-than-expected print could accelerate the Fed's rate-hiking timeline, heaping further pressure on silver.