Silver Rallies 2.9% to $67.64 as Oil Retreat Eases Inflation Grip, Deficit Narrative Intact

Silver settled at $67.64, up 2.9%, as easing oil prices relieved inflation and rate worries, though a firm dollar capped gains after the Fed hike.

Silver prices firmed sharply on Friday, with the metal climbing 2.9% to settle at $67.64 per troy ounce, as a pullback in crude oil prices offered temporary relief from the inflation and rate anxieties that had weighed on sentiment earlier in the week.

The catalyst came from reports that Saudi Arabia is weighing additional options for energy exports, including the ongoing restoration of the East-West pipeline. The resulting correction in oil markets eased yield pressure on US Treasuries, handing a tailwind to the non-yielding precious metal. The advance marks a reprieve from a multi-day soft patch that had set in at the start of the trading week.

Fed Backdrop Keeps a Lid on Gains

The upward move encountered resistance quickly. Following the Federal Reserve's rate hike last Wednesday, the US currency has held firm, capping silver's upside. Even after Friday's bounce, the metal trades 5.1% above its 50-day moving average — a level that underscores how much ground has already been covered.

Market participants read the Fed's move alongside receding price pressure as a signal of a more predictable macroeconomic landscape, a backdrop that traditionally supports precious metals. The prior month's liquidity factors had already triggered sizable swings, with that announcement sparking portfolio reallocation and delivering a powerful jolt to the metal.

Physical Tightness Draws Attention

Traders are keeping a close watch on inventories in exchange warehouses. Registered stocks — the portion available for immediate delivery — have slipped below the 100-million-ounce mark, a development that speaks to the market's physical tightness.

That tightness has a structural dimension. According to the Silver Institute, the global silver market has been running a deficit since 2021, with worldwide supply unable to fully meet industrial and investment-driven demand for several years running. The industry body projects a shortfall of 46.3 million ounces in the current cycle.

Solar Fade Offset by AI and EV Demand

The demand picture is shifting beneath the surface. Photovoltaic demand is expected to fall 19%, while overall industrial demand stabilizes at an estimated 639.6 million ounces. Fresh momentum is coming from artificial intelligence data centers, electric vehicle manufacturing, and the global buildout of grid infrastructure.

The World Silver Survey, cited by Reuters, expects physical investment demand to rise sharply to 227 million ounces — a projected 20% increase in bars and coins that largely offsets the pullback in other industrial segments and the decline in silverware. The market thus remains caught between rate pressure and structural supply scarcity.

Despite the persistent undersupply, price action continues to be marked by cyclical swings. After hitting a 52-week high of $121.78 on January 29, the metal underwent a pronounced consolidation before the recent calm on the rate and inflation front provided renewed lift.