Silver Selloff Continues: What's Really Driving the Weakness?
#Gold and #Silver Continue to Come Under Pressure Despite Lower Oil Prices. Let's take a look at Silver!
Gold is down approximately 1.6% today, while silver is off nearly 6%, trading below $62 on the CME. Given the magnitude of the selloff, it is worth taking a closer look at what is happening in the silver market.
While silver remains in a projected supply-demand deficit according to Metals Focus, the expected deficit is forecast to narrow significantly from approximately 318 million ounces in 2025 to 76 million ounces in 2026. At the same time, liquidity has improved in the OTC market, forward curves remain in contango, and London silver inventories have increased to approximately 888 million ounces, up roughly 136 million ounces from last year. CME warehouse stocks have declined from their peak of 533 million ounces during the tariff-driven squeeze, but at approximately 323 million ounces, they remain well above the pre-tariff level of around 250 million ounces.
When you combine a smaller projected deficit, improved market liquidity, higher U.S. interest rates, and a stronger dollar, it is not surprising to see a correction following silver's extraordinary run. After all, silver started 2025 near $29 per ounce and, even at current levels, remains up more than 110%, despite being well below the highs reached earlier this year.
The good news is that positioning and leverage have been significantly reduced since January. Much of the speculative excess has been removed from the market, creating a healthier foundation for a future rally. In the near term, I believe silver could test the $60 level, with the next major support area closer to $50. We may need some consolidation before the market is ready to move higher again.
I continue to believe the long-term fundamentals remain intact. Global geopolitical and economic uncertainty persists, industrial demand remains strong, silver continues to be viewed as a critical mineral, and the market is still expected to remain in deficit.
For now, patience is the key word as markets digest higher-for-longer interest rates and ongoing geopolitical uncertainty.
Views are my own and provided for informational and educational purposes only. This is not investment advice.