Silver's Tightrope Act Continues Amidst Hawkish Fed and Supply Gap
Silver's tightrope act continues as it navigates between a stubborn supply gap and the Fed's most hawkish faction in years. The physical market is so constrained that inventories have been drained for half a decade, while the US central bank shows its most divided face since 2016.
The tension was evident this week as silver swung from a sharp Friday decline to a modest Monday rebound. Spot silver dropped 2.51 percent on Friday to settle at $57.77 per ounce, but recovered some ground on Monday with a 1.37 percent gain to $58.38 per ounce.
The year-to-date picture remains deeply negative, with silver down 17.88 percent since January following last year's powerful rally and a sharp correction in the first half of 2026. The gold-silver ratio broke below 70 for the first time, indicating that silver may be gaining ground on its yellow-metal counterpart.
The supply-demand dynamic has been remarkably consistent, with the market experiencing an uninterrupted deficit since 2021. According to the Silver Institute, the shortfall reached 40.3 million ounces in 2025, and the World Silver Survey 2026 projects a sixth consecutive deficit year.