Silver Flirts With $60 as Physical Stockpiles Drain and Rate Fears Ease

Silver briefly touched $60 after a weak ADP jobs report and a less hawkish Fed speech by Chair Warsh, while physical deficits and industrial demand shifts shape the outlook.

Silver has been trapped between two opposing forces for months: a relentless drawdown in physical inventories and the gravitational pull of hawkish monetary policy. This week, the macro side finally relented, giving the white metal room to test the psychologically important $60 threshold.

The trigger came from an unexpectedly weak US labour market report. The ADP employment gauge for June registered just 98,000 new positions, well short of the 118,000 consensus estimate and down from 122,000 in May. The miss sent the dollar sliding — the US Dollar Index lost 0.3% — and silver jumped 1.3% to around $59.88, briefly touching the $60 round number in intraday trading.

Warsh strikes a softer tone

Fresh from taking the helm at the Federal Reserve on May 22, Chair Kevin Warsh used his first major policy address in Sintra on July 1 to signal a subtle shift in tone. While reaffirming the 2% inflation target, he acknowledged that inflation risks had "noticeably abated" and suggested the central bank would move away from rigid forward guidance. Markets interpreted the remarks as less hawkish than feared — the probability of a rate hike at the July FOMC meeting had already receded, and odds for a September move now stand at roughly 64%.

Lower interest rates reduce the opportunity cost of holding non-yielding assets like silver, and the change in rhetoric provided immediate relief. The rally also benefited from a broader precious metals recovery: gold reclaimed the $4,000 mark, while the yield on 10-year US Treasuries eased to 4.49%.

Physical scarcity keeps tightening

Underneath the macro noise, the structural supply picture continues to deteriorate. The Silver Institute projects the sixth consecutive annual deficit in 2026, with a shortfall of 46.3 million ounces — 15% wider than the previous year. Since 2021, almost 762 million ounces have been pulled from exchange and warehouse inventories. At the COMEX, immediately deliverable reserves now stand at roughly 82 million ounces, a fraction of the levels seen earlier this decade.

Mine supply remains stubbornly unresponsive to high prices. Roughly three-quarters of silver is produced as a byproduct of base-metal mining, so the incentive from elevated prices alone does little to boost output. That leaves the market heavily dependent on recycling and inventory releases — both finite sources when demand remains robust.

Industrial demand shows cracks

The one softening factor is industrial consumption. Solar panel manufacturers, which account for a growing share of silver use, have been hit hard by costs. When prices topped $80 an ounce, producers scrambled for alternatives — silver can represent up to 29% of a module's cost. That pressure is now feeding through. According to analysts at Metals Focus, solar-sector demand fell last year and is expected to drop further in 2026 to 151 million ounces. Even so, industry still absorbs roughly half of global silver output.

What’s next on the calendar

All eyes are now on Friday’s official non-farm payrolls report, released a day early on July 2 due to the Independence Day holiday. Economists expect a gain of 110,000 to 115,000 jobs, down sharply from 172,000 the prior month. The unemployment rate is seen holding steady at 4.3%. A confirmation of the ADP weakness could push silver decisively above $60.

Beyond the jobs data, two late-July events will shape the near-term trajectory. The FOMC meets on July 28–29, followed on July 30 by the June PCE inflation print. Together, they will determine whether rate anxiety or physical scarcity dominates price action through the summer. Meanwhile, traders continue to monitor US–Iran talks in Qatar, a geopolitical wild card that could add another layer of volatility to an already combustible market.