Silver Pauses at $58.31 as US Inflation Data Punctures Dollar Rally, but Supply Deficit and Demand Weakness Complicate Outlook

A burst of relief swept through the silver market on Thursday as US inflation figures came in exactly as forecast, halting a brutal June selloff that had slashed more than 20% from the white metal’s value. Spot silver climbed roughly 1.5% to trade near $58.31 per ounce, snapping a slide that brought it within striking distance of the key $56.50 support level.

The catalyst was the May reading of the Personal Consumption Expenditures (PCE) price index, which rose 4.1% year-on-year — matching analyst expectations to the decimal point. The core rate, which strips out volatile food and energy components, edged up 0.3% month-on-month and stood at 3.4% annually, a three-year high. Crucially, the data contained no upside shock, prompting the US dollar to retreat from its recent peak above 101 points. A weaker dollar lowers the cost of dollar-denominated bullion for buyers using other currencies, providing an immediate tailwind.

Yet the macro picture remains mixed. While the labor market continues to show resilience — initial jobless claims dropped to 215,000, well below the 225,000 forecast — the industrial side of the economy is flagging. Orders for durable goods tumbled 4.5% in May, in line with expectations but underscoring a slowdown in manufacturing that directly affects silver’s industrial demand. Analysts now expect global processing of the metal to fall to 650 million ounces this year, a headwind for a market already wrestling with a structural supply deficit.

Geopolitical developments have also eroded silver’s safe-haven premium. The mid-June signing of the Islamabad Memorandum between the US and Iran, which guarantees free passage through the Strait of Hormuz, has reduced risk appetite for precious metals. That détente contributed heavily to silver’s plunge from its January peak above $121, leaving the metal down nearly 50% from that high.

Should investors sell immediately? Or is it worth buying Silber Preis?

The fundamental backdrop offers conflicting signals. The Silver Institute projects a global market deficit of 67 million ounces in 2026 — the sixth consecutive year of supply shortfalls. However, other assessments put the gap at a narrower 46.3 million ounces, with the photovoltaic industry remaining the primary demand driver despite efficiency gains in solar cells. That structural undersupply provides a long-term floor, but near-term price action is dictated by monetary policy.

Federal Reserve Chairman Kevin Warsh has maintained a hawkish stance, refusing to rule out further rate hikes through year-end. Money markets are pricing in a 63% probability of a rate increase at the September meeting, and the PCE data did little to alter those odds. Higher interest rates raise the opportunity cost of holding non-yielding assets like silver, keeping the metal under pressure relative to gold.

Technically, silver has stabilized above the $56.50 support level, with a break below that opening the door to a retest of $55.61. On the upside, resistance sits at $60.48. For now, the pause feels tentative — a technical bounce in a downtrend, rather than a genuine reversal — and much will depend on whether the Fed’s next data points soften its resolve.