Silver’s Two-Front Battle: COMEX Delivery Surge vs. Iran Talks and a Patient Fed

While silver’s spot price has been retreating, the physical market is sending a very different signal. At the COMEX, over 22 million ounces of the metal have been flagged for delivery — a clear indication that real-world availability remains under pressure. Yet that tightness has done little to arrest the slide. On Friday, silver closed at $75.83 per ounce, shedding 0.50% on the day and 0.49% for the week, though the monthly comparison still shows a 5.95% gain.

The disconnect between paper and physical is stark. Silver now trades 35.13% below the all-time high of $116.89 notched on 28 January — a peak that has evaporated in just a few months. Anyone who bought at the start of 2026 is sitting on a painful loss, while investors who entered during the 2025 rally still have a roughly 4% annual gain.

Macro headwinds overwhelm physical premiums

The main culprit for silver’s weakness is a shift in the macro backdrop. The April CPI reading came in at 3.8%, the biggest monthly advance since May 2023, dashing hopes for an early rate cut. The probability of a June reduction collapsed to below 8%, and markets now pencil in the first Federal Reserve move for November or December, with some forecasts stretching into 2027. The Fed last eased rates during 2025 to a 3.50%-3.75% range and has held them steady for three meetings. The next decision, on 16-17 June, includes a dot plot — the first since March — making it a critical guidepost.

Rising diplomatic hopes are also weighing on sentiment. Talks are underway to extend the US-Iran ceasefire by 60 days, chipping away at the geopolitical risk premium that had supported precious metals. Any disruption to shipping or energy infrastructure could keep oil prices elevated, further reinforcing the Fed’s cautious stance. Geopolitics this time acts as a headwind, not a tailwind.

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Analysts trim expectations amid supply-demand recalibration

The macro pressure has prompted a round of downward revisions. UBS slashed its forecast for the silver supply deficit from 300 million ounces to just 60-70 million ounces, while its outlook for investment demand fell to 300 million ounces from over 400 million previously. The analyst consensus remains cautious: J.P. Morgan expects an average of around $81 per ounce this year, the Reuters median from 30 analysts sits at $79.50, and ING sees $78. All compare with the current spot price of $75.83, which is fractionally below the 50-day moving average of $76.09.

Structural deficits persist but fail to drive prices

Despite the short-term bearishness, the long-term supply picture remains tight. The Silver Institute projects a sixth consecutive annual deficit in 2026 of around 46 million ounces. Cumulative stock withdrawals since 2021 have reached almost 762 million ounces. Yet the structural deficiency — roughly 70% of silver is produced as a by-product of base-metal mining, so price signals do little to boost supply quickly — is being offset by weakening demand drivers on the margin.

On the demand side, the solar sector continues to grow at 14% annually and now accounts for 16% of global silver consumption, while electric vehicles contribute nearly 3% with an upward trend. However, China’s export controls, which helped propel silver from $29 to over $121 in 2025, remain a wildcard. Whether Beijing loosens or tightens restrictions will be one of the biggest unknowns for the second half of the year.

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Technical levels and data on deck

Technically, the market is not decisively damaged. The close Friday was just 0.35% under the 50-day average, the relative strength index at 58.9 signals no extreme overheating, and the 30-day volatility is elevated at 55.53%. That leaves room for sharp swings, especially if physical delivery concerns resurface.

Traders will watch the US jobs report on 5 June as the next catalyst, feeding into the Fed’s 16 June decision. A strong labour market would further boost the dollar and add to silver’s headwinds. On the downside, the $70-$72 zone has provided support on multiple occasions; a break below that would mark a significant deterioration in the chart. For now, silver remains caught between a physical squeeze and macro gravity — a tension that is unlikely to resolve until the Fed signals a clearer path.

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