Silver Falls for Second Straight Session

Silver dropped below $81 an ounce on Friday, marking a second consecutive session of declines as weakness across the broader metals complex intensified amid rising concerns over US inflation and potential rate hikes. Data released earlier this week showed US wholesale inflation accelerated at its fastest pace since 2022 in April, while consumer prices recorded their sharpest increase since 2023. Inflation pressures have been fueled largely by the prolonged Iran war and the ongoing closure of the Strait of Hormuz, which has significantly disrupted global energy flows. Markets have now fully priced out the possibility of a Fed rate cut this year, while some are betting on a potential rate hike by December. Despite the recent pullback, silver had rallied earlier in the week and outperformed other precious metals, supported by stronger industrial demand expectations tied to electronics, solar panels, and other applications that rely on the metal’s high electrical conductivity.

Silver fell to $85.6 an ounce Thursday as investors focused on the meeting between US President Donald Trump and Chinese President Xi Jinping. Trump stated that Xi had agreed to assist with Iran "with whatever" he needs, while Xi noted progress in trade talks but warned that disputes over Taiwan could strain relations and even risk conflict. Investors also digested US data showing both import and export prices surged more than expected last month, driven by rising fuel import costs and nonagricultural export prices. Following earlier hot consumer and producer price data, markets have priced out US interest rate cuts for this year, with a near 30% chance of a hike by December. Despite India raising import tariffs on gold and silver to 15% from 6%, industrial demand prospects for silver, used in electronics, solar panels, and other applications due to its high electrical conductivity, remain supportive. The metal also continues to serve as a traditional investment asset alongside gold.

Silver climbed toward $88 an ounce, reaching its highest level in two months and outperforming other precious metals as industrial demand prospects improved. The metal, widely used in electronics, solar panels, and other industrial applications due to its high electrical conductivity, also serves as a traditional investment asset alongside gold. The gains came despite India raising import tariffs on gold and silver to 15% from 6%. However, reduced expectations for Federal Reserve rate cuts limited further upside. Hotter-than-expected US inflation data, with producer prices surging the most since early 2022 and consumer inflation hitting the highest since May 2023, led investors to price out a US rate cut this year, according to CME Group’s FedWatch. Elsewhere, US President Donald Trump’s visit to China will be monitored for any progress on the fragile trade truce and the Iran conflict.