Silver’s $74.81 Pivot: A Sixth Year of Deficit Meets the Most Divided Fed in a Generation

Silver trades near $74.80 as record industrial demand from AI and data centers clashes with a divided Federal Reserve, keeping prices range-bound.

The silver market is being pulled in two opposing directions, and the result is a price that refuses to budge. On Wednesday morning, the white metal traded at $74.81 per ounce, having clawed back from a weekly low of $72.65 after buyers stepped in to defend a key support zone. The recovery above $74.80 is being watched closely by technicians, but the bigger story lies beneath the surface.

For six consecutive years, global demand for silver has outstripped supply. The Silver Institute projects a deficit of roughly 46 million ounces in 2026 alone. That structural shortfall is reshaping the market in ways that go far beyond any single trading session.

Industrial Demand Rewrites the Rules

The old narrative of silver as a mere satellite to gold is fading fast. Industrial applications now account for around 60% of global demand, decoupling the metal from pure precious-metal dynamics and tying it instead to the health of the global economy.

The photovoltaic sector remains a major consumer, though its relative weight is shrinking. The real growth engine is the artificial intelligence boom. Meta, Alphabet, Microsoft and Amazon are planning a combined $715 billion in capital expenditure this year — nearly double last year’s figure. In the most recent quarter alone, over $130 billion flowed into data centers and AI infrastructure.

Silver’s unique properties make it indispensable here. It boasts the highest electrical and thermal conductivity of any metal, making it critical for high-performance computing, advanced cooling systems and the power supply networks that support them. Every new data center is a fresh source of demand for the metal.

A Fed Divided Against Itself

Offsetting this industrial tailwind is the most fractured Federal Reserve in decades. The central bank has held its benchmark rate at 3.50% to 3.75%, but the latest vote revealed a rare split: four members dissented from the consensus, a level of discord not seen since the early 1990s.

Minneapolis Fed President Neel Kashkari has kept the door open to further rate hikes, citing the risk of an inflationary shock from the Strait of Hormuz. Disruption to that critical energy corridor would send oil prices — and inflation expectations — sharply higher. While that scenario would theoretically support silver as a hard asset, it would also strengthen the US dollar, a headwind for any non-yielding commodity.

The market is betting the Fed will hold steady at its mid-June meeting. But until the central bank signals a pivot toward easing, the monetary backdrop will continue to cap silver’s upside.

Where the Market Goes From Here

The tug-of-war between booming industrial demand and restrictive monetary policy has left silver in a narrow range. Chartists are watching the $80 resistance level closely. A sustained break above that threshold could open the door to $90 in the weeks ahead, analysts say.

On the downside, the $72.50 zone has proven resilient, underpinned by physical buying from large industrial consumers. That floor is likely to hold as long as the tech sector’s infrastructure spending remains on track.

For now, the direction of travel depends on two variables: the next batch of US economic data and developments in the Middle East. The structural deficit provides a solid foundation, but the near-term catalyst will have to come from either a shift in Fed policy or a resolution — or escalation — of geopolitical tensions.