Silver's Bipolar Week: Iran Talks Lift, India Import Curbs Weigh

The silver market has been on a rollercoaster, lurching from a crash to $74.20 an ounce to a rapid recovery that pushed prices above $78 within days. The rebound accelerated Tuesday, with the metal climbing as much as 3.9% in some sessions and settling near $78.60–$78.71. The catalyst was a sudden shift in geopolitical winds: reports that US President Donald Trump called off a planned strike on Iran, after appeals from Saudi Arabia, Qatar and the UAE, rekindled hopes for a diplomatic breakthrough. Lower geopolitical tension eases inflation fears, and that was enough to flip sentiment.

Yet for all the relief rally, a heavy anchor remains in place. India, one of the world's largest silver consumers, has slammed the door on imports. Since mid-May, high-purity silver bars require a special license, effectively restricting more than 90% of inbound shipments. On top of that, New Delhi jacked up import duties on gold and silver from 6% to 15%, a move aimed at stemming rupee outflows and protecting the domestic market. India sources roughly 80% of its silver from abroad, so these barriers are a direct blow to global demand. The UBS swiftly cut its silver demand forecast and trimmed its expectations for the market deficit, while HSBC now projects a shrinking supply gap of 73 million ounces this year, nearly halving from previous levels, and sees the deficit narrowing further by 2027.

Macroeconomic headwinds are compounding the pressure. US producer and import prices rose more than expected in April, keeping core inflation stuck at 2.8%. That has all but extinguished hopes for a Federal Reserve rate cut in June, with some traders even pricing in a potential hike by December. With bond yields climbing, silver’s lack of yield makes it less attractive next to fixed-income assets. The metal’s dual identity as both an industrial commodity and a safe-haven asset amplifies its sensitivity to inflation data and central bank expectations.

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Underlying demand, however, tells a more bullish story. Global physical silver consumption is forecast to jump 20% this year, hitting a three-year high, driven by solar, electric vehicles, electronics and the semiconductor boom tied to artificial intelligence. Half of that volume comes from industry. On the supply side, new mining projects—such as Barton Gold’s exploration in Australia—take seven to ten years to reach full output, offering little near-term relief. These structural forces clash with the near-term drags from India and the Fed, creating a tense standoff.

For now, silver is trapped in a trading range between roughly $74 and $78. The next breakout attempt will depend heavily on the upcoming Fed minutes and whether the Iran thaw can hold. The metal’s split personality—industrial growth versus monetary tightening—means volatility is likely to persist until one side gains a decisive upper hand.

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