Silver's Volatile Week: Truce, Tightening, and a Ticking Supply Clock

Silver prices surged past $76.70 on US-Iran ceasefire news but faced pressure from Fed minutes. The metal is caught between monetary policy and a severe physical supply crunch.

Silver prices surged past $76.70 an ounce on Wednesday, propelled by a sudden geopolitical shift. News of a two-week ceasefire between the US and Iran sent oil prices tumbling below $100 a barrel for the first time since late February, temporarily easing inflation fears that have weighed heavily on precious metals. The white metal’s gains, which reached as high as 5.5% to nearly $77, notably outpaced gold, pushing the gold-silver ratio below 63 and highlighting silver’s dual role as both a monetary and industrial asset.

However, the rally proved fragile. Minutes from the US Federal Reserve’s March meeting, released concurrently, struck a hawkish tone that quickly tempered investor optimism. The records revealed deepening skepticism among policymakers, with many concerned that prolonged geopolitical conflict could keep energy prices elevated, further stoking core inflation. This monetary policy stance presents a direct headwind for non-yielding assets like silver.

The market’s focus now shifts to upcoming PCE inflation data, which will provide the next concrete signal for interest rate expectations and set silver’s near-term direction. In the meantime, the metal is caught between powerful opposing forces.

Beneath the surface of these macroeconomic crosscurrents, a severe physical supply crunch continues to build. The fundamental picture remains extraordinarily tight, supported by three critical factors. COMEX inventory coverage has plummeted to a historically low level of just 13.4%, a threshold below 15% that historically signals critical stress and often precedes tangible delivery squeezes. Furthermore, the global market is grappling with its sixth consecutive annual supply deficit, estimated at approximately 67 million ounces.

Adding to the strain, China imported nearly 207 tonnes of silver in the first two months of this year. Existing Chinese export restrictions on the metal, coupled with robust industrial demand from the technology and solar sectors, are intensifying this global scarcity. This structural shortage provides a substantial buffer against deeper price declines, helping to cushion the market following silver’s 40% slide from its January peak.

From a technical perspective, silver’s break above $75 is a positive near-term signal. The next significant resistance zone is seen between $78 and $79, a level that will test the rally’s sustainability. If the $75 level holds as support, the technical setup remains constructive. Looking further ahead, analysts project a wide potential price range for 2026, from $65 to $150 in moderate scenarios, with persistent demand from the solar industry serving as a key structural bullish argument.

Ultimately, silver navigates a complex landscape. A restrictive Fed caps its short-term upside potential, while the physical market’s deep deficits and critical inventory levels provide a powerful floor. The immediate catalyst will be whether incoming economic data confirms or contradicts the central bank’s cautious outlook.