The spot silver price fell to approximately $57 per ounce on Tuesday, marking a decline of about 2 percent. This drop follows a period last week when prices approached the $60 level.
Market sentiment shifted as the US dollar strengthened, with some reports indicating the currency is near its highest level in a month. The rise in the US dollar index also contributed to the downward pressure on silver prices.
Federal Reserve Expectations Shift
Investors are closely watching the Federal Reserve’s two-day meeting, which, according to one source, is scheduled to conclude on Wednesday. According to CME FedWatch data, there is now a 38 percent probability of a 25 basis point rate hike, up from about 16 percent one week earlier. The probability of the Fed keeping rates unchanged stands at 62 percent.
Looking further ahead, the probability of a rate hike at the September meeting is currently estimated at about 81 percent. These shifting expectations have heightened concerns over interest rates, impacting precious metal valuations.
Supply Deficit Forecasts Persist
Despite short-term price weakness, structural factors continue to support the market outlook. The Silver Institute forecasts a global supply deficit of about 46.3 million ounces this year. This represents a revision from a previous forecast of approximately 67 million ounces.
The institute expects the global silver market to record a supply deficit for the sixth consecutive year, through 2026. Physical investment demand for silver coins and bars is projected to increase by about 20 percent to 227 million ounces this year.
Industrial usage remains a key driver, with silver utilized in electronics, solar energy, electric vehicles, and other sectors. However, regional supply constraints have emerged; India's tighter import restrictions and high import taxes have reduced the amount of silver entering the country, causing local shortages.
Technical Indicators and Regional Prices
Technical analysis identifies the support level for silver at $56.81, corresponding to the 50 percent Fibonacci retracement level. Resistance levels are positioned at $58.34, $58.99, $59.96, and $61.38. One indicator suggests the Relative Strength Index (RSI) has fallen to approximately 34, approaching oversold territory.
In Turkey, the domestic gram silver price fell to 87 Turkish Liras. Broader market movements also played a role, as reports of a decline in gold prices affected the silver market. Additionally, reports of new attacks in the Middle East persist despite statements of open dialogue between the US and Iran, adding another layer of geopolitical context to the trading environment.