Silver’s Ceasefire Bounce Unravels as Sticky Inflation Overshadows Supply Deficits

Silver briefly surged 4.6 percent on Friday after a provisional agreement between the US and Iran to extend a Middle East ceasefire by 60 days, but the rally evaporated by the close. The precious metal settled at $75.83 an ounce, down 0.5 percent on the day, leaving it virtually flat on the week. Over the past 30 days, however, the metal has still gained nearly 6 percent — a testament to the competing forces pulling at the market.

The whipsaw price action reflects an unusually tight tug-of-war between bullish supply constraints and bearish macroeconomic headwinds. The annualized 30-day volatility stands at 55.5 percent, underscoring just how quickly sentiment can shift between geopolitical optimism and interest-rate anxiety. From its January high of $116.89, silver has fallen 35 percent, with the 50-day moving average hovering near $76 — a level that now acts as the immediate technical battleground.

Inflation data punch holes in the rate-cut narrative

The main drag on silver comes from the latest US inflation figures. The PCE price index climbed to 3.8 percent year-over-year, while core PCE hit 3.3 percent. Both readings dampened hopes for imminent rate cuts, and for a non-yielding asset like silver, higher real yields and a stronger dollar reduce its relative appeal. The second estimate for first-quarter GDP came in at 1.6 percent, below the initial 2.0 percent forecast, which also dims the outlook for industrial demand — a critical factor given that roughly half of all silver consumption comes from industry.

These macro pressures have overshadowed the supply-side story, at least for now. The Silver Institute projects the sixth consecutive global deficit in 2026, with mine output falling 46.3 million ounces short of combined industrial and investor demand. On the physical front, COMEX inventories have slipped below 100 million ounces, a threshold that signals diminishing buffer stock. Meanwhile, LBMA vaults in London hold 882.7 million ounces, but only 26.7 percent is freely available, reinforcing the tightness in the physical market.

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Demand shifts from solar to batteries and AI

The demand landscape is also evolving. While the solar industry has reduced its silver intake, new drivers are emerging from battery technologies and applications linked to artificial intelligence. Silver’s dual identity — safe haven and industrial metal — leaves it exposed to competing signals. Geopolitical tensions in the Middle East provide a floor for haven buying, but yields and currency moves have been the dominant force in recent weeks.

Technically, silver is grinding just below the 50-day moving average of $76.09, with the relative strength index at 58.9, indicating neither overbought nor oversold conditions. Resistance sits at $77.92 (the 20-day line) and the $78 round number. A sustained break above those levels could open the path toward the 100-day average near $81.15-$81.73. On the downside, support is anchored at the May low of $73.09, with the 70.87 zone offering a deeper floor. The 200-day moving average rests far lower at $65.97.

Data-packed week ahead could tip the scales

The coming week brings a flurry of US economic releases that may determine silver’s next direction. Monday’s ISM manufacturing index, Tuesday’s JOLTS job openings, Wednesday’s services PMI, and Friday’s comprehensive May employment report will all feed into bond yields and the dollar. Strong numbers would further erode rate-cut expectations, pressuring silver lower. A disappointing set, however, could revive the metal’s appeal and test the resistance levels above.

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For now, the price remains trapped inside a narrow range where the structural deficit bull argues for higher prices, but the macro bear keeps pulling the leash. The outcome likely hinges on whether the data flow validates the hawkish Fed view or forces a reassessment — a pivot that would allow silver’s supply-scarcity story to take center stage again.

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