During the Asian session on Thursday, June 4th, the price of silver rebounded by more than 1% before paring some gains to trade near $73.30 per ounce. This followed a sharp decline in the previous trading session.

However, the overall outlook for the metal remains bearish, primarily due to market concerns over a potential prolonged U.S. maritime blockade of Iranian ports and the pressure from expectations of a hawkish Federal Reserve policy on non-yielding assets.

U.S. Maritime Blockade Concerns Weigh on Silver Outlook

On Wednesday, U.S. President Trump stated that the American maritime blockade of Iran could potentially last until Labor Day (September 7th), though he also expressed confidence that such a scenario was "unlikely."

If a permanent resolution is not reached between the U.S. and Iran, a sustained blockade would imply long-term restrictions on energy transport through the Strait of Hormuz, further elevating global energy prices.

For economies heavily reliant on oil imports, this would create a dual pressure of deteriorating trade terms and imported inflation. For precious metals like silver, persistent energy price increases would reinforce expectations for the Fed to maintain high interest rates while simultaneously suppressing industrial demand.

President Trump's "unlikely" comment has somewhat eased market concerns. However, as long as negotiations lack substantive progress, the risk of a prolonged blockade cannot be entirely dismissed.

Silver Under Pressure Since the Middle East Conflict

Since the outbreak of the Middle East conflict, silver's price performance has consistently lagged. Rising oil prices have increased global inflationary pressures, forcing traders to drastically adjust their bets on Federal Reserve policy. Before the conflict, the market widely anticipated two rate cuts. Currently, not only have rate cuts been completely priced out, but the market has even begun pricing in the possibility of a further rate hike within the year.

This reversal in expectations is the core reason for silver's persistent underperformance. In theory, Fed rate hikes are a clear negative for non-yielding assets like silver: rising interest rates increase the opportunity cost of holding silver, prompting investors to shift towards higher-yielding dollar-denominated assets. As long as geopolitical tensions persist, oil prices remain elevated, and the Fed maintains a hawkish stance, silver's upside potential will continue to be constrained.

U.S. Employment Data Provides Market Guidance

From the U.S., the better-than-expected May ADP employment data released on Wednesday set a positive tone for Friday's non-farm payrolls report. The data showed the U.S. private sector added 122,000 jobs, exceeding the expected 117,000 and the previous reading of 105,000, indicating continued resilience in the labor market.

If Friday's non-farm payrolls data is similarly strong, it could further reinforce market expectations for the Fed to maintain its restrictive policy stance.

For silver, robust employment data implies two transmission paths: first, it gives the Fed more reason to keep rates high or even hike further, which is negative for silver; second, it could lead to a stronger U.S. dollar, further pressuring silver prices. Conversely, if the non-farm data disappoints, it could temporarily alleviate some of silver's downward pressure.

Institutional Perspectives

TD Securities forecasts that silver prices will rise from $78.50 per ounce in the third quarter of 2026 to $84.50 by the second quarter of the following year. Its core rationale is based on rapidly growing demand from artificial intelligence, data centers, electric vehicles, solar panels, and grid upgrade projects, while global silver mine supply growth is limited. The market has already experienced a supply deficit for several consecutive years. With both investment and industrial demand expanding, the silver market is gradually entering a phase of structural shortage.

UBS has significantly revised down its silver price forecasts, lowering its end-June target from $100 to $85, its September target from $95 to $85, its December target from $85 to $80, and its March 2027 target from $85 to $75. This adjustment is primarily based on: cooling investment demand (ETF holdings have plummeted by nearly 70 million ounces this year), weakening photovoltaic demand due to high prices, suppressed silver jewelry demand from high prices, and a recovery in mine supply (expected to approach 850 million ounces). UBS expects the silver supply deficit in 2026 to narrow significantly to 60-70 million ounces from a previous estimate of 300 million ounces.

On the daily chart, spot silver retreated after a prior surge to 121.49. It has been oscillating higher from the March low of 60.96 and is currently trading below the 50-day moving average (MA50 at 76.11) while holding above the long-term support of the 200-day moving average (MA200 at 67.41). In the short term, it faces resistance from the 50-day MA, trading in a range-bound box between 73 and 90. A break above 76.12 could see a test of previous highs, while a drop below 73 would target the support of the MA200 below.

The MACD indicator's lines are below the zero line with the green histogram showing slight expansion, indicating short-term bearish dominance but no deep weakening signal. The RSI indicator at 44 is in the neutral zone, not in overbought or oversold territory, suggesting the continuation of a range-bound consolidation pattern. Overall, the larger cycle remains biased towards a volatile bottoming process, relying on the 200-day moving average.

Silver prices have staged a technical rebound after consecutive declines, but the overall outlook remains fragile. Concerns over a potentially prolonged U.S. maritime blockade of Iran, inflationary pressures stemming from the Middle East conflict, and rising expectations for a hawkish Federal Reserve collectively form the three key headwinds facing silver.

As of 13:52 Beijing Time on June 4th, spot silver was trading at $73.20 per ounce.