Silver has experienced a rollercoaster ride this week. In the first half, prices surged significantly as Peru's declaration of an energy crisis emergency decree raised market concerns over potential supply reductions. However, the latter part of the week saw the release of U.S. CPI and PPI data, revealing significantly heightened inflation pressures. Coupled with a robust 4.9% year-on-year increase in U.S. retail sales for April—the strongest performance in nearly eight months—market expectations for future interest rate cuts have cooled further, with some even anticipating rate hikes. This scenario has strengthened the U.S. dollar, putting downward pressure on precious metals. Additionally, the U.S. Senate's approval of Kevin Warsh as Federal Reserve Chair has introduced uncertainty, with markets closely awaiting his initial official remarks on inflation and monetary policy. Ahead of this statement, risk-averse market participants engaged in profit-taking, leading to a sharp sell-off and a reduction in silver positions, with intraday losses exceeding 10%.

From a fundamental perspective, data from the World Silver Institute indicates that global silver supply will fall short of demand for the sixth consecutive year in 2026, with the deficit widening by 15% compared to 2025, further highlighting supply-side vulnerabilities. Concurrently, silver demand continues to rise, with its industrial applications now serving as a core driver of prices. Beyond traditional sectors like photovoltaics, the global push to develop AI computing infrastructure, new energy vehicles, and their supporting facilities is generating substantial demand for silver, for which there is currently no large-scale substitute using other metals. Inventories at both domestic and international exchanges remain at multi-year lows, sustaining a tight physical delivery environment. Following the recent release of pessimistic sentiment and the mitigation of high-price risks, silver prices may have room for recovery, with key factors to watch including mining sector developments and broader macroeconomic sentiment.