Silver’s Slide Toward $64 Belies a Physical Supply Squeeze as Traders Brace for Hawkish Fed and CPI Firestorm

Silver extends brutal losing streak, tumbling over 4% to near $64 as rising bond yields and looming CPI data fuel selloff, despite structural supply deficit and strong Chinese demand.

Silver extended its brutal losing streak on Monday, tumbling more than 4% to hover near $64 an ounce as a powerful cocktail of interest-rate anxiety and geopolitical turmoil sent investors scrambling out of zero-yield assets. The selloff, which also hammered gold and base metals, marks the latest leg in a decline that has wiped nearly half the metal’s value since it hit an all-time high of $121 in January.

The immediate catalyst is a looming inflation data dump. The US Bureau of Labor Statistics will release the May consumer price index at 8:30 a.m. Eastern on Wednesday. Economists expect the annual rate to hit 4.2% — the highest in three years and a figure that would slam the door on any near-term rate cuts. The Federal Reserve, now under new chair Kevin Warsh, is already pricing in a “hard landing” scenario in which borrowing costs stay elevated well into next year.

Behind the inflationary spike lies an escalating energy crisis. The US has blocked Iranian sea ports and the Strait of Hormuz is effectively closed, driving oil prices sharply higher. Expensive energy feeds directly into broader inflation, robbing central banks of any flexibility to ease policy. For silver, which offers no yield, the message is stark: rising bond yields will continue to sap its appeal until the macro environment shifts.

That macro pressure is overwhelming what would normally be a powerful support factor — a structural supply deficit. The Silver Institute forecasts 2026 will mark the sixth consecutive year of shortfall, with a gap of roughly 46 million ounces. Global mine output is stagnating at about 820 million ounces, while industrial demand is rotating away from solar panels and toward data centers and electric vehicles. Yet none of that has been enough to arrest the price slide.

Nowhere is the disconnect more visible than in China. While western futures markets have been hammered, Chinese importers are paying premiums of as much as 10% above the spot price. Silver imports into the country hit an eight-year high early this year as domestic retail investors flee a weakening yuan and seek refuge in physical metal. The Shanghai and New York futures markets both recorded losses of more than 4% on Monday, but the physical market in China tells a radically different story.

Chart watchers see little respite in the near term. The metal is now testing critical support around $64, and if Wednesday’s CPI numbers come in hotter than expected, a drop to $61 is likely. A break of that level would open the door to $55. On the upside, silver must reclaim the psychologically important $70 handle to snap the current downtrend. Until then, the tug-of-war between a tightening physical market and a hawkish macro backdrop will keep traders on edge.