The DXY reclaiming the 100 level is the whole problem for silver right now. Every overseas buyer is paying more for the same ounce and the pullback in physical demand was immediate last week. When the dollar runs nearly a full percent in five sessions, buyers outside the United States do not step in. They wait for the currency to settle before placing new orders and that waiting game strips the bid out from under the price.
Speculative traders were already reducing exposure going into the week and with no physical buying to absorb the selling, silver fell almost five percent without meeting any resistance on the way down. The selling fed on itself while the dollar kept pushing higher at the same time.
The Fed’s policy stance is keeping this trade alive. U.S. rates are attractive relative to every other developed economy and capital is flowing into Treasuries and dollar assets. The yield advantage keeps growing and silver cannot compete with it. The U.S. is offering the best return in the developed world and money goes where it gets paid. That flow into dollar assets is not stopping anytime soon and every dollar that goes into Treasuries is a dollar that is not going into silver.
Physical Buyers Sat This One Out
India went quiet. China went quiet. European fabricators pulled back orders. The dollar’s move was too fast for any of the major importing regions to absorb and when those buyers step away at the same time, silver has no floor. The price dropped almost five percent and never found a bid on the way down because nobody outside the United States was willing to pay up in a currency that was moving against them every session.
Dealers that normally show up on a dip this steep were not interested. Speculative selling ran straight through the market with nothing underneath it. That does not reverse until the DXY settles down and physical buyers get comfortable with the exchange rate again. Right now they are watching, not buying.
Industrial Demand Is Real but Not Trading
Solar, AI infrastructure, EVs, grid buildouts, advanced electronics. The industrial consumption story has not changed and the supply constraints are not going anywhere. None of it mattered last week. The dollar and yields owned the tape and industrial buyers were not going to fight the currency to place orders on a Friday with the DXY at a weekly high.