Silver prices fall sharply as USD surges on hawkish Fed; may test $60

Silver prices have plunged, trading at $64.89 per troy ounce as of June 19, a sharp 8.62% year-to-date decline and well off its June 17 high of $71.57. This retreat is largely a direct consequence of a surging US dollar, buoyed by the Federal Reserve decidedly hawkish stance following its latest Federal Open Market Committee meeting. The precious metal, which has a significant industrial demand, now eyes the critical $60 support level, raising concerns about further downside if current macroeconomic headwinds persist. The Federal Reserve, under its new Chair Kevin Warsh, maintained the federal funds rate at 3.50%-3.75% but signaled a potential rate hike later in 2026, marking a significant shift from previous expectations of easing. This 'hawkish hold' is driven by persistently elevated inflation, which at 4.2% in May, remains well above the Fed's 2% target, alongside robust US labor market data. The strengthened USD, reaching a one-year high, makes dollar-denominated commodities like silver more expensive for international buyers, thereby dampening demand and contributing to price pressure, even as some geopolitical tensions in the Middle East ease. Looking ahead, market participants will be closely monitoring upcoming US economic data, particularly the Consumer Price Index and employment figures, for further clues on the Fed's monetary policy trajectory. Technical indicators suggest silver faces immediate resistance at around $65.79, with a decisive break below the $62.00 support level potentially opening the door to the $52.00 mark. While a long-term structural supply deficit for silver could provide some underlying support, the immediate outlook remains volatile, with a clear path to $60 looking increasingly probable under the prevailing hawkish sentiment.