Silver’s 8% Rout Masks Deepening Structural Deficit as Jobs Data Resets the Fed Clock

Silver drops 8% after US jobs report delays Fed rate cuts, but structural supply deficit and surging industrial demand from solar, EVs, and AI keep long-term outlook intact.

The white metal suffered one of its worst single-day losses in months on Friday, sliding 8% to close at $67.96 an ounce. The drop erased recent gains and brought the year-to-date decline to roughly 6%, but beneath the surface the dynamics are far more complex than a simple risk-off move.

A far stronger-than-expected US jobs report for May triggered the sell-off. The economy added 172,000 new positions, roughly double the figure analysts had forecast. The unemployment rate held steady at 4.3%, while solid wage growth fanned fresh inflation concerns. The data has pushed expectations for Federal Reserve rate cuts deeper into 2026, dealing a heavy blow to non-yielding assets like silver. US Treasury yields surged in response and the dollar strengthened, raising the opportunity cost of holding the metal.

The macro shock was compounded by a degree of geopolitical uncertainty. While some US statements hinted at a late phase of peace negotiations in the Middle East, Iran’s foreign minister pushed back forcefully, keeping tensions around the Strait of Hormuz elevated and adding an extra layer of caution among traders.

Yet for all the short-term pain, the supply side of the silver market tells a very different story. The world is now in its sixth consecutive year of structural deficit, with annual demand consistently outstripping combined mine output and recycling. Global inventories continue to shrink. A key factor is that roughly 70% of silver production comes as a by-product of copper and zinc mining, meaning the supply response to higher prices is severely limited.

Industrial demand, meanwhile, shows no sign of easing. Solar photovoltaic manufacturing and electric vehicles remain heavy consumers of silver’s superior conductivity, and a new driver is emerging: artificial intelligence hardware, which relies on the metal for high-performance connectors and chips. The Silver Institute expects physical investment in silver to jump 20% in 2026, reaching a volume of 227 million ounces.

Chart watchers have a clear set of levels to monitor after Friday’s breakdown. The metal is now trading well below its 50-day moving average of $76.37. The first line of defence is support near $72, but if that fails, the next technical target lies between $65 and $68, a zone that aligns with the $67.30 area mentioned by analysts. The decline from the all-time high of roughly $122 set in January has already wiped out 44% of the metal’s value.

All eyes now turn to the Federal Reserve’s Federal Open Market Committee meeting on June 16-17. Updated economic projections and the so-called dot plot are expected to provide clarity on the rate path. As long as the dollar remains strong and rate-cut hopes remain subdued, silver will struggle to regain its footing. But the gap between a tightening macro backdrop and an increasingly tight physical market means the metal’s longer-term narrative remains far from broken.