Silver Slides as US-Iran Tensions and Hawkish Fed Comments Weigh
Oil prices remain elevated due to stalled US-Iran talks, keeping silver prices under pressure. President Donald Trump rejected Iran's proposal to reopen the Strait of Hormuz, while Iran maintained that it won't soften its conditions. This uncertainty has strengthened expectations for additional Federal Reserve tightening to combat inflation.
Cleveland Fed President Beth Hammack cited resilient economic growth, a robust labor market, and rising government debt concerns in supporting a hawkish stance. New York Fed President John Williams said another rate hike by year-end is reasonable, while Richmond Fed President Tom Barkin highlighted broader inflation pressures beyond energy and tariffs.
Despite the recent correction, silver prices are heading toward their sixth consecutive structural deficit, with 762 million troy ounces drawn from stocks since 2021. The 2026 deficit is projected to widen to 46.3 million ounces from 40.3 million ounces in 2025, despite a decline in total demand by 2%.