A single sentence from a Federal Reserve official was enough to snap silver out of its deepest slump in seven months. The white metal shot to $60.07 per ounce on Thursday, a 1.67% gain, after Fed governor Kevin Warsh told the ECB’s annual forum in Sintra that inflation expectations had eased over the past month. A rate hike, he implied, was no longer urgent.
The remarks triggered an immediate wave of buying that erased part of the sharp losses suffered in June. On Wednesday alone, silver had already climbed 3% to hit $60, buoyed by the same dovish undertones and by renewed tensions between the US and Iran. Direct talks in Qatar remain on the table, but investors are pricing in a prolonged period of geopolitical uncertainty that favours safe-haven assets like the precious metal.
The rally comes just days after silver touched its lowest point since November. According to FXStreet data, spot prices had slid to roughly $57.67 on Wednesday, down from $58.49 the previous Tuesday. September futures opened at $59.25 on Wednesday, roughly 1.1% below the prior session’s close. Over the past month the metal has still lost 17.36%, though it remains 63.01% higher year-on-year.
Yet beneath the short-term volatility, a structural imbalance continues to tighten its grip on the market. The latest World Silver Survey projects an annual supply deficit of 46.3 million ounces for 2026 — the sixth consecutive year in which demand outstrips mine and recycling output. Global stockpiles are being drawn down at an accelerating pace.
Industrial consumption now accounts for roughly 60% of total demand, and the composition of that demand is shifting. Improved efficiency in solar-cell manufacturing is reducing silver usage per panel, but that drag is being offset by the explosion in artificial intelligence. Data centres and high-performance chips depend on silver’s unmatched thermal and electrical conductivity. Electric-vehicle production adds another leg of demand. Analysts estimate that the new AI-related consumption is increasingly compensating for the slowdown in photovoltaics.
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On the supply side, the picture remains stubbornly rigid. About 70% of global silver production is a by-product of copper, lead and zinc mining. That means output barely responds to silver’s own price signals. Unless base-metal miners invest heavily in new projects — and there is little sign they will — the structural scarcity is locked in for the foreseeable future. Mexico, Peru, China, Australia, Chile, Bolivia, the US, Poland and Russia remain the largest producing nations.
Near-term, however, the price direction hinges squarely on US monetary policy. A strong dollar and bond yields hovering near 4.47% have been punishing for the non-yielding metal, prompting institutional investors and macro funds to rotate capital away. Those sell-offs accelerated the June rout after the long-term uptrend broke down.
Technicians at IG Deutschland pinpoint the $57.90 area as a critical support floor. A clean break above $60.88 could open the door to a summer recovery rally, provided that upcoming US jobs data come in softer than expected. Weaker payrolls would ease the pressure on the Federal Reserve to keep tightening and would remove a key headwind for silver.
For now, the market is caught between two powerful forces: a six-year supply deficit that ensures physical scarcity, and a rate cycle that sours the appetite for zero-yield assets. The Sintra speech tipped the scales temporarily toward the bulls. Whether that shift has legs depends on how quickly the job market cools.
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