After a 14% Weekly Selloff, Silver Catches a Breather on Softer PCE Data – But the Fed and a Waning Risk Premium Signal More Pain
Published on 06/26/2026 at 19:46 | Redaktion boerse-global.de
Silver’s sixth consecutive supply deficit – a projected 46.3 million ounces this year – would normally underpin prices. Instead, the metal has been hammered by a hawkish Federal Reserve, a resurgent dollar, and the evaporation of geopolitical risk following the Iran peace deal. The result: a brutal 14% weekly loss that brought the year-to-date decline to nearly 20% by Friday. A slightly softer-than-expected U.S. inflation report offered a temporary floor, but analysts see few catalysts for a sustained rebound.
The Personal Consumption Expenditures (PCE) price index for May provided a moment of relief. The headline figure rose 0.4% month-over-month, below the 0.5% forecast, while the core measure held steady at 0.3%. On an annual basis, headline PCE accelerated to 4.1% – the highest since April 2023 – and core reached 3.4%, its strongest since October 2023. Both readings remain well above the Fed’s 2% target, but the absence of a nasty surprise was enough to knock the dollar off its one-year high and pull Treasury yields lower, giving silver a brief lift.
That lift is unlikely to last. Markets are now pricing an 80% probability of a Fed rate hike in December and a 63% chance of a move in September. Bank of America sees three quarter-point increases – in September, October, and December of 2026 – taking the federal funds rate to 4.25%–4.50%. Deutsche Bank is slightly less aggressive, expecting two hikes. Fed Chair Kevin Warsh has doubled down on the inflation fight, and the central bank recently raised its core PCE forecast for 2026 from 2.7% to 3.3%, pushing back any return to the 2% target to at least 2028.
The dollar’s strength – it touched a one-year high this week – remains the dominant headwind. A strong dollar makes dollar-priced metals more expensive for overseas buyers, sapping demand. The gold-silver ratio closed the week near 69:1, close to its highest since the Iran war peak, confirming that silver is underperforming gold on a relative basis.
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Geopolitical tailwinds have also faded. Mid-June saw the U.S. and Iran sign a preliminary peace agreement, calming the Strait of Hormuz. Shipping traffic has almost returned to pre-crisis levels, prompting speculators to unwind safe-haven hedges rapidly. The fear of a major supply disruption – a key driver of silver’s earlier rally – is largely gone.
The fundamental picture is more nuanced. The Silver Institute reports that global stockpiles have shrunk by over 760 million ounces since 2021, and 2026 will mark the sixth straight year of deficit. But industrial demand is faltering. The solar sector, a major consumer of silver, has cut orders by 19%, while jewelry and silverware orders have slumped. That weak spot is outweighing the structural deficit for now.
Chartwatchers see little room for a rapid recovery. The relative strength index (RSI) has slipped to 27.5, deep in oversold territory, but technical risk remains to the downside. The metal briefly dipped below $55.60 on Friday; if support at $54.56 breaks, a deeper slide is likely. On the upside, the first resistance lies around $58.
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One potential silver lining: oil prices have fallen back to pre-Iran conflict levels, reducing inflation pressures. That could soften the case for a September rate hike. The first test will come with the June PCE release on July 30, the first data point to fully capture the post-truce oil drop. If it comes in softer, the pressure on silver might ease – but until then, the metal is caught between a hawkish Fed and fading safe-haven demand.
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