Silver’s Summer Squeeze: Indian ETF Inflows Jump 300% While Supply Deficit Enters Sixth Year

Silver continues to trade in a tight band between $54 and $64 an ounce, hovering near $58.55 as of July 14, 2026, with a daily range of $56.87 to $59.68. The metal remains historically elevated, yet upside momentum has been capped by a tug-of-war between bullish fundamentals and macro headwinds ranging from Federal Reserve policy uncertainty to rising geopolitical tensions in the Middle East.

Indian ETF buying surges despite spot price stagnation

While spot silver has struggled to break decisively higher, fund investors in India — one of the world’s largest physical silver markets — have been piling in. According to the Association of Mutual Funds in India, gold ETF inflows surged 575% month-on-month in June, while silver ETFs posted a staggering 300% jump. The buying spree suggests that retail investors treated May’s price correction as an entry opportunity, betting on a longer-term uptrend despite short-term volatility.

The robust ETF demand dovetails with a broader structural narrative: the global silver market is facing its sixth consecutive year of supply deficit. The Silver Institute estimates a shortfall of 46.3 million ounces in 2026. Physical investment in silver has risen 20% so far this year, and industrial buyers — from electronics manufacturers to the booming photovoltaic sector — continue to consume large volumes even as efficiency gains modestly curb per-unit usage.

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Weak inflation data offers relief, but Fed remains hawkish

The recent uptick in silver was triggered by softer-than-expected US inflation figures. June’s Consumer Price Index fell to an annual rate of 3.5% from 4.2% in May, and posted a monthly decline of 0.4% — the largest drop since April 2020. The Dollar Index slid below 101 in response, making silver cheaper for overseas buyers and providing a one-day boost of 1.56% to the metal.

Those inflation numbers initially dampened expectations for further rate hikes. However, the outlook remains clouded. Fed Chair Kevin Warsh has maintained a stern tone, reiterating his commitment to fighting persistent inflation. The CME FedWatch Tool now pegs the probability of a September rate hike at 50–58% — down from earlier estimates but still significant. Traders are awaiting the Producer Price Index data for additional clues on the path of monetary policy.

Geopolitical turmoil adds another layer of uncertainty

Adding to the complexity, the military situation in the Strait of Hormuz has escalated sharply. US blockades and Iranian countermeasures have effectively closed the waterway, driving oil prices to a one-month high. Rising energy costs threaten to reignite inflationary pressures, potentially pushing the Fed back toward tighter policy. That dynamic has weighed on precious metals across the board: gold slipped to around $4,025, dragging silver lower in sympathy. Analysts at OCBC note that silver’s higher beta compared with gold makes it more sensitive to such cross-currents.

Technical picture signals near-term weakness

On the charts, silver is consolidating beneath a key downtrend line. Resistance sits in the $59.11–$59.20 area, while immediate support is at $58.30. A break below that level could open the door to $56.90. The Relative Strength Index stands at 45, pointing to a neutral-to-slightly-bearish bias. Short-term models project a potential pullback to $55–$57 in the latter half of July, with the next Federal Open Market Committee meeting likely to determine whether the month ends near the top or bottom of the current range. Until then, silver remains caught between a structural deficit-driven floor and a ceiling reinforced by monetary and geopolitical uncertainty.

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