Silver's $76.41 Crossroads: A Market Torn Between a Hawkish Fed and a Deepening Supply Crisis

Silver drops 6.6% to $76.41 amid Middle East turmoil, sticky inflation, and Fed rate hold expectations, despite a persistent supply deficit.

The white metal is caught in a tug-of-war that has left it nursing a 6.6 percent weekly loss at $76.41 an ounce, roughly a third below its January peak of $116.89. On one side, a structural supply deficit that has persisted for half a decade. On the other, a toxic cocktail of geopolitical turmoil, sticky inflation, and a Federal Reserve that shows no signs of easing.

The Hormuz Effect

The Straits of Hormuz remain effectively closed. Peace talks between Washington and Tehran have stalled — the US canceled a planned diplomatic mission to Islamabad, while Iran refuses to negotiate under what it calls duress. The result has been a 44 percent surge in Brent crude prices since hostilities began, pushing US consumer price inflation to 3.3 percent, its highest since May 2024.

For a non-yielding asset like silver, this is a double blow. Rising energy costs feed inflation, which in turn keeps central banks from cutting rates. Since the conflict erupted, silver has shed roughly 17 percent of its value. The metal's problem is compounded by the fact that higher interest rates directly undermine the appeal of assets that pay no income.

The Fed's Pivot

Market expectations for the Federal Reserve have shifted dramatically. The CME FedWatch tool now assigns a 99.5 percent probability that the FOMC will hold rates steady at its April 28-29 meeting. More tellingly, traders have moved from pricing in two rate cuts this year to now contemplating a potential hike. An economist survey suggests the central bank will wait at least six more months before easing policy.

Under incoming Fed Chair Kevin Warsh, the market anticipates only gradual reductions. The focus at next week's FOMC meeting will be on forward guidance rather than any immediate policy change.

Technical Levels in Focus

Chart watchers have identified the zone between $70 and $80 as a critical physical support area following January's selloff. The 50-day moving average sits at $78.72, roughly 3 percent above current levels. More concrete support lies at $72.66, while resistance is clustered between $75.50 and $76.80. The 200-day moving average at $61.68 provides a substantial floor further down.

On a monthly basis, silver has recovered about 10 percent from its lows, though the short-term headwinds from the FOMC meeting and Middle East tensions are likely to dictate direction in the coming days.

The Supply-Demand Paradox

The fundamental picture tells a different story. The Silver Institute projects a supply deficit of 46.3 million ounces for 2026 — the sixth consecutive year of shortfall. The cumulative deficit over the past five years has already exceeded 800 million ounces.

Demand, however, is showing a split personality. The photovoltaic industry is aggressively reducing silver content per module to protect margins, pushing industrial demand to a projected four-year low of 639.6 million ounces in 2026. Industry accounts for 58 percent of global silver consumption, so this thrifting trend matters.

Yet physical investment demand is swinging the other way. A 20 percent increase to 227 million ounces is expected this year, marking a three-year high. In China, premiums on physical silver have reached around 15 percent, with imports surging in March as retail buyers piled in and solar manufacturers accelerated purchases ahead of export tax rebate changes.

A Wide Range of Forecasts

Analyst projections span an extraordinary range. Bloomberg strategist Mike McGlone sees silver trading in a $50 to $100 range for years, warning that January's high of $116.89 may prove to be a generational peak. Trading Economics forecasts around $78 by year-end and roughly $92 in 12 months. J.P. Morgan expects an annual average of $81, while Commerzbank targets $90 by December. At the extremes, some estimates place silver at nearly $150 by year-end, while others see it as low as $68.

What to Watch Next Week

Friday brought a modest recovery after Pakistani government sources hinted at possible progress in US-Iran negotiations. The FOMC decision and the status of peace talks will be the dominant drivers in the days ahead. For a market squeezed between a record supply deficit and a Fed that won't budge, the next few sessions could determine whether silver finds its footing or tests deeper support levels.