Silver's 10.7% Weekly Plunge: Why U.S. Inflation and India's Tariff Reversal Are a Toxic Mix for the Metal

Silver fell 10.71% last week after US inflation data and a surprise India import duty hike, but remains up 7.31% YTD amid a sixth-year supply deficit and strong solar demand.

Silver has surrendered more than a third of its value since touching a record near $117 an ounce in late January, and the selling turned violent last week when two unrelated headwinds—a hotter-than-expected U.S. inflation print and a shock tariff hike in India—collided. The metal closed Friday at $77.55, capping a 9.12% single-session rout and a weekly loss of 10.71%. Despite the carnage, silver remains 7.31% higher year-to-date, a reminder that the long-run trend still carries a tailwind.

The immediate trigger for Friday's selloff was U.S. inflation data that came in above consensus. Bond yields surged and the dollar strengthened, a combination that is particularly punishing for an asset that generates no income. Rising real yields erode the appeal of holding silver relative to interest-bearing alternatives, and speculative positions on the futures market were caught off guard as expectations for Federal Reserve rate cuts faded. The market has now fully priced out any Fed easing in 2026, and a growing number of participants are bracing for the possibility of rate hikes by December.

Compounding the macro pressure was a dramatic regulatory shift in the world’s largest silver importer. India raised import duties on gold and silver to 15% through a combination of a base tariff and an agricultural surcharge, fully reversing the cuts introduced in 2024. New Delhi is reacting to a surge in precious-metal imports—silver purchases jumped 44% over the past year to more than $9 billion, and record gold buying in January 2026 pushed the trade deficit to a three-month high—by trying to relieve pressure on the rupee. Industry insiders have warned that the move could revive smuggling networks that had been dormant.

The tariff shock arrives just as the Federal Reserve’s tightening bias is already dampening speculative appetite. The Iran conflict and the blockade of the Strait of Hormuz are adding another layer of price anxiety by threatening supply chains. Together, the macro and regulatory shocks have fractured the uptrend that carried silver from mid-2025 into its January peak. The metal is now testing its 50-day moving average at $77.13, while trading well below the 100-day average of $82.73.

Yet beneath the short-term turmoil, the fundamental picture remains unusually tight. The global silver market has recorded a supply deficit for the sixth consecutive year, with inventories draining by hundreds of millions of ounces over that period. Industrial demand, especially from the solar-energy sector, provides a structural buffer that gold lacks. Photovoltaic manufacturing now accounts for nearly 20% of global silver consumption, and the industry's shift to more efficient N-type cells is raising the amount of metal needed per unit of installed capacity.

The U.S.-China tariff ceasefire announced recently has also added support to the industrial demand side, keeping electronics and solar supply chains flowing. That counterweight explains why a 10% weekly rout does not automatically spiral into a free fall: a structurally undersupplied market can absorb selling pressure as long as end-use consumption holds up.

Technically, the next line of defense is the $75 zone. A sustained break below that level would open the door toward $70 and likely trigger a deeper reassessment of mining-sector valuations. On the upside, a swift recovery above $80 would be needed to repair the chart, with the $85 resistance area emerging as the next intermediate target if the 50-day average holds.

Mining stocks will provide the earliest confirmation of whether the market is stabilizing. Hecla Mining and Pan American Silver have both come under pressure alongside the metal. If these equities begin to steady, it would signal that the worst of the selling is over. A slide below $75, however, would almost certainly reignite the debate about a prolonged re-rating of the entire precious-metals complex.