Silver Plunges as Rate Hike Fears Bite
Silver dropped 6% to $79 an ounce on Friday, extending losses for a second consecutive session, as concerns over rising US inflation and potential rate hikes weighed on the market. Recent data revealed that US producer, import, and export prices rose at their fastest pace since 2022 in April, while annual inflation reached its highest level since 2023, due to the prolonged Iran war and the ongoing closure of the Strait of Hormuz. Markets have now fully priced out the chance of a Federal Reserve rate cut this year, with some traders even wagering on a potential hike by December. Adding to the pressure, UBS strategists slashed their full-year investment demand from over 400 million ounces to 300 million ounces, amid weaker industrial usage, and increased mine supply. The bank also expects the silver market’s supply deficit to shrink dramatically to around 60–70 million ounces, down from a previous estimate of 300 million ounces.