Silver Plunges to New Lows as Jobs Report Resets Fed Expectations; Structural Deficit Offers Little Support

Silver drops 8.3% after strong US jobs report, breaking below key moving averages; physical market remains tight with supply deficits and risks from upcoming CPI data.

Silver suffered its steepest one-day drop in months on Friday, tumbling 8.3% to $67.96 an ounce as a blowout US jobs report rewrote the interest-rate narrative. The weekly loss of 10.37% leaves the metal down 44% from its 52-week high of $121.78, reached in late January, and places it 12.09% below where it traded a month ago.

The catalyst was unmistakably macro. The US economy added 172,000 new jobs in May, while the unemployment rate held at 4.3%. For a market that had been pricing in a dovish pivot from the Federal Reserve, the data landed like a cold shower. The central bank’s key lending rate sits in a 3.50%–3.75% range, and with core PCE inflation hovering around 2.7%, officials now have little incentive to ease policy quickly. Higher-for-longer interest rates punish zero-yield assets like precious metals, and silver bore the brunt.

Technically, the damage is stark. The spot price closed well below its 50-day moving average of $76.37, a gap that now stands at 11.01%. The relative strength index has fallen to 35.3, a level that suggests oversold conditions but not yet extreme, while 30-day annualized volatility has surged to 58.94%. Traders are already eyeing a support zone between $67.30 and $67.57, underpinned by the rising 200-day moving average. A break below that level could open the door to $65 and, further out, $60.

The immediate horizon is packed with risk events. Wednesday, June 10, brings the May consumer price index — the most critical inflation gauge before the Fed’s next decision. Thursday, June 11, adds producer prices and weekly jobless claims, coinciding with the European Central Bank’s policy meeting. Friday, June 12, rounds out the week with the University of Michigan consumer sentiment survey, which includes inflation expectations. The Fed’s own Open Market Committee will then meet on June 16–17.

Yet beneath the macro-driven sell-off, the physical market tells a different story. Analysts expect the sixth consecutive year of structural supply deficit. Industrial demand from solar, semiconductors, and electric vehicles remains robust, even as mine output stagnates. COMEX registered inventories have shrunk roughly 70% since 2020, and London Bullion Market Association vaults have also reported persistent outflows. That physical tightness could amplify any rebound in investment demand, though for now the dollar index hovering near 100 adds a further headwind for the dollar-denominated metal.

Some manufacturers are already adapting. The sharp price run-up earlier this year prompted certain solar producers to explore copper substitution in order to reduce silver exposure — a reminder that even a structurally tight market can generate its own demand destruction at elevated levels.

The jobs-induced rout has reset rate expectations firmly, but the fundamental backdrop of scarcity has not gone away. Whether the short-term macro pressure or the longer-term deficit narrative wins out will depend heavily on the inflation data due this week and the tone the Fed takes at its June meeting.