Silver tests $57 support as stronger dollar pressures precious metals

Silver fell to $57.03 per troy ounce on the spot market, down 3.2% this week, as the US dollar index climbed to a three-month high.

"The strong dollar is creating significant headwind for silver, and as long as DXY remains elevated, pricing power will struggle," said Arslan, a finance MBA and behavioral finance analyst.

Silver has lost about 50% of its value since reaching a record $121.64 on Jan. 29, when fears of tighter Fed policy under then-nominee Kevin Warsh triggered a 27% single-day plunge. The metal is now trading near an 11-month low, with the 50-period EMA at $62.81 serving as major resistance, according to technical data.

A break below $57 could open the door to $55.60, the next downside target based on the current downtrend channel from the January highs. The next catalyst is the Fed's July 28-29 meeting, where rate expectations will shape dollar direction and, by extension, silver's near-term path.

The selloff comes despite a multiyear supply deficit that is now in its sixth year, according to industry data. Silver mine supply remains constrained because the metal is largely produced as a byproduct of copper and lead-zinc mining, limiting producers' ability to ramp up output in response to price signals.

Industrial demand, which accounts for about 60% of silver consumption, continues to grow. Solar panel manufacturing, AI chip production, and electric-vehicle components are driving fabrication demand, though some solar producers have begun substituting copper to reduce costs after silver's 2025 rally, according to sector reports.

J.P. Morgan analysts forecast silver finishing 2026 around $80 per ounce, implying about 40% upside from current levels, though they caution that near-term volatility will persist as the Fed's rate path remains uncertain.

This article is for informational purposes only and does not constitute investment advice.