Silver has tumbled roughly 16.8% so far in June, sliding to around $62 per ounce as a trio of forces—tightening monetary policy, cooling geopolitical tensions, and sustained ETF liquidation—overwhelms a structurally tight physical market. The sell-off accelerated during the Federal Reserve’s June meeting week, when the metal crashed from nearly $70 to $64, and has since extended losses.
The Federal Reserve’s pivot under new Chair Kevin Warsh is the primary culprit. Warsh’s first meeting ended with no rate change, but the hawkish tone sent shock waves through commodity markets. With U.S. inflation at 4.2%, the central bank has adopted a more restrictive stance. Committee members are split: half anticipate higher rates, while the other half see rates unchanged or lower by end-2026. According to CME FedWatch, traders now see a roughly 70% probability of another rate hike in September, while a separate measure shows 66% odds of a hike by December. That shift has hammered non-yielding assets like silver, especially as the two-year U.S. Treasury yield hit a 16-month high of 4.23%, drawing capital away from precious metals.
Adding to the pressure, institutional investors are dumping silver ETFs. Global holdings have dropped 9.2% since the start of the year, with net outflows totaling nearly 3 million ounces last week alone. A single recent session saw more than 205,000 ounces exit the funds. This selling spree has overwhelmed the underlying industrial demand from solar panel manufacturing, electric vehicles, and AI infrastructure—sectors that continue to consume physical silver at a steady clip.
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The geopolitical backdrop has also turned less supportive. The signing of a memorandum between the U.S. and Iran on June 17 eased fears of an escalation in the Middle East, reducing silver’s risk premium as a crisis hedge. On the charts, the metal has broken key support at $63 and is now eyeing its year low of $61.01, with the psychologically important $60 level in sight. The relative strength index sits at 34.6, near oversold territory but without a clear reversal signal, according to IG analysts. A sustained break below $60 could open the door to $55, while resistance stands at the recent high near $67.
Despite the price rout, the physical market tells a different story. The Silver Institute projects a global supply deficit of 46.3 million ounces in 2026, up from 40.3 million ounces the prior year. Industrial buyers of silver for photovoltaics, EVs, and data centers are largely ignoring the central bank’s tightening cycle, maintaining robust offtake. This structural shortage has left analysts deeply divided.
Forecasts range starkly. TD Securities expects the metal to average a meager $44 per ounce in 2026, while Commerzbank sees a rebound to $90. OCBC is even more bullish, forecasting $95 by mid-2027. The gold-silver ratio has climbed back to 64, which some interpret as a sign that silver is not yet undervalued relative to gold. Investors are now awaiting the June 25 PCE inflation print—the Fed’s preferred gauge—which could set the near-term direction for the metal.
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