Silver futures sprinted past the $70 threshold on Monday, reaching $70.75 an ounce in early trading as a US-Iran ceasefire agreement and a near-certain Fed rate pause converged to lift the metal. The opening bell had already signaled strength: July contracts began at $68.90, up 1.4% from Friday’s close, before a fresh wave of buying carried the price to its highest level in weeks.
The geopolitical catalyst was swift. Iran agreed to freeze its nuclear activities, and in return Washington secured the full reopening of the Strait of Hormuz, a chokepoint that handles roughly 20% of global oil flows. Brent crude plunged as much as 5% to $83 a barrel, easing inflation fears and weakening the US dollar. A softer greenback makes dollar-priced commodities cheaper for international buyers, giving silver an immediate tailwind. The rally extended gains from last week, though
A New Fed Era Begins with a Dovish Signal
All eyes now turn to the Federal Reserve, where Kevin Warsh presides over his first FOMC meeting. Markets have priced in a 97% probability that the central bank will hold its benchmark rate steady in the 3.50%–3.75% range for a third consecutive meeting. The ceasefire has dampened expectations for a winter hike: the implied probability of a December increase has slipped from 70% to 57%, a shift that bolsters non-yielding assets like silver.
Yet caution lingers. Warsh’s communication style is untested, and institutional investors often trim positions in volatile, yield-less assets before a new chair’s debut. That selling pressure could offset the fundamental support from the rate pause. Adding to the tension, the May consumer price index came in at 4.2% year-on-year — the hottest reading since April 2023 — giving the Fed reason to keep a hawkish tone even as it holds steady.
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Technical Hurdles and a Six-Year Deficit
On the charts, silver has established solid support at $68.50, but to confirm the uptrend the price must break decisively through the resistance zone near $71. A portion of the recent rally has been driven by short covering, leaving the metal vulnerable to a pullback if catalysts fade.
Beneath the daily volatility, the market’s structural story is one of persistent scarcity. The supply deficit for 2026 is projected at 46.3 million ounces — the sixth consecutive annual shortfall and a sharp acceleration from the previous year’s 40.3 million ounces. Demand patterns are shifting: solar photovoltaic manufacturers, for which silver paste accounts for 10–20% of cell costs, are paring consumption amid margin pressure and overcapacity. But other industrial buyers — from electric vehicles and AI infrastructure to electronics — continue to run at full tilt, independent of Fed decisions.
Gold-Silver Ratio Hints at Upside
The gold-silver ratio stands at roughly 62, meaning gold is trading significantly higher relative to silver — a sign the white metal may be undervalued on a historical basis. Gold itself is defending the $4,300 level, providing a floor for sentiment across the precious complex. If Warsh signals a neutral or dovish path at his post-meeting press conference, investment capital could flow back into silver, putting the physical deficit back in the spotlight as a price driver.
For now, silver’s advance rests on a fragile peace and a dovish Fed bet. Should oil prices resume their slide — or should Warsh strike a more cautious tone — the metal’s industrial ties to energy markets could quickly check its momentum.
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