• Spot silver tumbled nearly 5% to $55.17 an ounce, part of a broad precious-metals selloff driven by rising oil prices and inflation fears.
  • The decline deepens an already weak month, with silver down over 15% from a month ago despite remaining higher year over year.
  • Industrial demand concerns and expectations of prolonged higher U.S. interest rates add pressure, though a persistent supply deficit offers a potential long-term floor.

Broad Precious-Metals Rout

Spot silver extended its losses on Thursday, plunging nearly 5% to $55.17 an ounce as a wave of selling hit precious metals. The move came amid a broader decline that saw gold fall 1.1% to $4,094.90 an ounce, platinum drop 2.1%, and palladium lose 2.6%. The synchronized slump points to macroeconomic drivers rather than silver-specific news.

According to market participants, the selloff is being fueled by rising oil prices, which have surged toward $98 a barrel following drone attacks on Saudi oil facilities. Higher energy costs are stoking inflation concerns and reinforcing expectations that the U.S. Federal Reserve will keep interest rates elevated for longer. “Further oil gains could lift inflation expectations and the likelihood of prolonged higher rates, weighing on gold,” said Kelvin Wong, an analyst at OANDA. The same opportunity-cost mechanism applies to silver, which pays no interest.

Earlier snapshots showed silver already under pressure: at 8 a.m. EDT, it was quoted at $55.75, down 3.32% from the previous day’s reference and 15.55% lower than a month ago, though still up about 15% year over year. The exact $55.17 level, a nearly 5% decline, reflects a later observation time and may vary across pricing feeds. Indian futures also fell, with December MCX (MCX.NS) silver trading around ₹204,804 per kilogram, down ₹4,364 from the previous close.

Inflation and Fed Policy in Focus

The immediate catalyst is the interplay between energy costs and monetary policy. Recent U.S. consumer and producer inflation figures came in hotter than expected, with energy a major contributor. While policymakers are widely expected to remain patient at next week’s Federal Reserve meeting, the market is recalibrating its rate outlook. The pressure on silver reflects changing expectations rather than any new rate announcement.

Geopolitical tensions in the Middle East and Red Sea shipping risks are feeding through to oil prices, which in turn affect inflation expectations and global metals markets. No new silver-specific tariffs or regulations have been identified as the trigger for the decline.

Industrial Demand and Supply Deficit

The industrial outlook for silver is mixed. Demand from the solar sector is forecast to fall 3% in 2026 to about 639.6 million ounces as manufacturers reduce silver use per cell and substitute other materials. However, demand from AI infrastructure, electrical equipment, and automotive applications remains supportive. The World Silver Survey projects a 46.3-million-ounce market deficit in 2026, the sixth consecutive annual shortfall, though that figure was revised down from an earlier estimate of 67 million ounces.

Metals Focus remains constructive on silver in its World Silver Survey analysis, citing recurring deficits and depleted above-ground stocks, but warns that geopolitical instability and economic uncertainty could weaken industrial demand and sustain volatility. A physical deficit does not preclude further short-term losses when macroeconomic conditions turn unfavorable.

The current decline follows an exceptionally volatile year. Silver hit an all-time high of $121.64 in late January before halving to around $60.94 in March. The $55.17 level would put it roughly 55% below that peak. In 2011, silver approached $50 an ounce before a sharp reversal during the commodities “flash crash,” ending the year down 9.5%.

Investors and bullion holders face mark-to-market losses, while new buyers can enter at lower prices. Miners may see revenue and margin pressure if lower prices persist, and industrial users could benefit from cheaper raw materials, depending on inventory arrangements. Consumers face mixed effects: cheaper silver helps silver-containing products, but higher oil prices raise broader energy costs.

Outlook

In the near term, oil prices, inflation expectations, and Fed communication will dictate silver’s direction. Continued oil strength could prolong interest-rate pressure on precious metals, while easing energy concerns or a less restrictive policy outlook could stabilize them. The parallel declines in gold, platinum, and palladium underscore the importance of the broader macroeconomic backdrop; silver need not receive fresh negative industry news to remain under pressure when investors are reducing exposure across metals.

A lasting recovery would require investment demand to absorb available metal while industrial users continue reducing silver intensity in some applications. Conversely, a supply deficit does not guarantee a price floor in the face of unfavorable macro conditions.

Correction: An earlier version of this article misstated the year-over-year change in silver prices. It is approximately 15% higher, not lower.