On Wednesday, July 1st, spot silver was trading around $57.5 per ounce, down about 1.9% on the day, a significant drop from its early June highs. The daily chart also shows that the price remains close to the lower Bollinger Band, and the MACD remains in negative territory, indicating that the short-term pricing focus has not yet escaped its weak structure. Meanwhile, the 10-year US Treasury yield is around 4.47%, and the US dollar index is around 101.30; interest rate and exchange rate variables continue to exert valuation pressure on non-interest-bearing assets.

Silver pricing has shifted to a growth-sensitive phase.

The core contradiction for silver today is no longer simply a one-way game between inflation and interest rates, but rather whether "high financing costs can coexist with the resilience of the manufacturing sector." This is also the fundamental reason why silver and gold tend to diverge in price movements. Gold carries more of the attributes of credit, reserve, and safe haven, while silver is embedded in industrial chains such as electronics, power, photovoltaics, automobiles, and data centers, making its price more elastic to growth expectations.

The US manufacturing PMI for May came in at 54.0%, marking the fifth consecutive month of expansion. The new orders index rose to 56.8%, the production index to 54.3%, and the price index remained high at 82.1%. In other words, the manufacturing sector is not experiencing a full-blown recession, but rather is caught in a complex combination of "still demand, high costs, and weak employment." For silver, this combination can provide support for industrial demand but also amplify valuation pressures in a high-interest-rate environment.

Yields remain the ceiling for silver price rebound.

While silver possesses industrial attributes, this doesn't mean it can escape interest rate pricing. The Federal Reserve maintained the target range for the federal funds rate at 3.50% to 3.75% in June, emphasizing that inflation remains above the 2% target and that economic activity continues to expand at a solid pace. This policy statement implies that the market is unlikely to quickly rebuild an accommodative trade-off, and silver's financial attributes continue to be constrained by real interest rates and the US dollar index.

Currently, the 10-year US Treasury yield is around 4.47%, and the 2-year yield remains above 4%, indicating that the yield curve's pressure on precious metals has not disappeared. The US dollar index remaining above 101 has also weakened the willingness of non-dollar funds to chase higher silver prices. The drop in silver prices from above $75 in early June to around $57 is essentially the result of a combined squeeze from previous overvaluation, long positions, and interest rate revaluation. Short-term price lows do not automatically equate to the completion of pressure release; the key lies in whether manufacturing data can demonstrate that industrial demand is sufficient to offset tightening financial conditions.

The key to ISM data is not its strength, but whether it is deteriorating.

The market is focused on tonight's US ISM manufacturing data, not because a single monthly reading can determine silver's direction, but because it will influence traders' repricing of silver's industrial attributes. If the data only moderately declines from 54.0 to near market expectations, it signifies a slowdown in expansion momentum rather than a demand collapse. For silver, a slowdown in expansion and the end of expansion are two completely different pricing scenarios.

More importantly, the breakdown of components is crucial. If new orders continue to expand, it means that corporate capital expenditure and downstream restocking still have a foundation; if the production index remains above 50, it indicates that industrial demand has not yet significantly slowed down; if the price index continues to be high, it will limit the scope for policy shifts, putting downward pressure on silver prices due to interest rates. Silver is currently not simply betting on growth, nor is it simply betting on interest rate cuts, but rather seeking a new equilibrium between "resilient industrial demand" and "high interest rate suppression."

Structural demand remains, but the photovoltaic logic has been repriced.

In the medium to long term, silver remains inextricably linked to industrial narratives. Industry organizations predict that global total silver demand will remain largely flat in 2026, with industrial processing demand potentially declining by 2% to approximately 650 million ounces, primarily due to silver conservation and substitution in the photovoltaic sector; however, data centers, artificial intelligence-related technologies, automobiles, and other electrification applications will continue to support some industrial end-uses.

This means that the structural logic behind silver has not disappeared, but rather shifted from being solely driven by photovoltaics to being supported by diverse industrial applications. From a trading perspective, it's crucial to distinguish between "long-term use expansion" and "short-term price pressure." If financing costs remain high, the long-term story of industrial demand is unlikely to immediately translate into price trends; however, if manufacturing continues to expand moderately, silver may continue to retain higher cyclical elasticity compared to gold.