Silver’s Two-Faced Market: Macro Rout Overshadows Sixth Straight Year of Supply Deficit

Silver crashed 8.3% to $67.96 after blockbuster US jobs report dashed rate cut hopes. But a chronic undersupply of 46M oz and record industrial demand signal a tight market beneath the surface.

The white metal ended last week in a tailspin, suffering its worst single-day drop in months after a blockbuster US jobs report shattered any remaining hopes of an early rate cut. But beneath the surface of the price slide, a very different story is playing out — one of chronic undersupply and booming industrial demand that has left the market effectively gridlocked.

Friday’s data from the Bureau of Labor Statistics showed the US economy added 172,000 nonfarm payrolls in May, while the unemployment rate held steady at 4.3%. The numbers trounced analyst forecasts and sent silver plunging 8.3% to a settlement of $67.96 an ounce — the lowest close since late March. On a weekly basis, the metal has now surrendered 10.37%, widening the gap to its 50-day moving average of $76.37 at an alarming pace.

The violent reaction reflected a swift repricing of Federal Reserve expectations. With Kevin Warsh at the helm, the market is increasingly pricing in a “higher for longer” interest-rate environment. Higher real yields and a strengthening dollar are a double blow for a zero-yielding asset like silver, making it less attractive relative to bonds and more expensive for overseas buyers. The knock has been severe: from the all-time peak of $121.78 reached in January 2026, silver now trades fully 44% lower.

On the charts, traders are focusing on a support band between $67 and $68 — a zone that has already been probed. A clean break below $65 would likely accelerate selling as stop-losses and futures-position adjustments kick in. On the upside, any bounce faces initial resistance near $72, with a move above that level seen as the minimum prerequisite for a recovery attempt toward $80.

But while macroeconomic headwinds dominate price action, the fundamental backdrop remains tight. The Silver Institute expects 2026 to mark the sixth consecutive year of market deficit, with a shortfall of roughly 46 million ounces. Global mine production is edging lower to 844 million ounces, even as industrial consumption from photovoltaics, electric vehicles and AI hardware sits at record highs. The structural gap is widening, not narrowing.

Further complicating the outlook is a geopolitical layer that has so far been overlooked by many metals traders. The US-led maritime blockade of Iranian seaports in the Middle East has pushed up energy costs and inflation expectations, narrowing the Fed’s room to ease policy. That dynamic is likely to keep a floor under real rates and, by extension, a ceiling on silver prices.

This week offers a fresh set of catalysts. On Wednesday, June 10, the US consumer price index for May will be released — a sticky reading could renew selling pressure. The European Central Bank follows with its rate decision on Thursday, with new projections likely to signal the eurozone’s policy trajectory. And the Fed’s own two-day meeting on June 16–17 will provide the big-picture verdict on monetary policy.

Silver is caught in a tug-of-war between immediate macro realities and long-term supply constraints. For now, the bears have the upper hand — but the structural deficit means the metal is not without a floor.