Silver Holds Near $65 as Rate Bets Clash With a Deepening Supply Squeeze
Published on 08/19/2026 at 22:30 | Redaktion boerse-global.de
Silver has settled into a consolidation phase around $65 per ounce, hovering close to its strongest level since late June after a volatile stretch that saw the metal swing more than $6 in a matter of weeks. The latest leg of support traces back to softer US inflation data, which has reinforced market expectations that the Federal Reserve will hold rates steady next month — a scenario that historically favors the yield-free metal.
The path to this plateau has been anything but smooth. In early August, spot silver climbed from roughly $62 to a seven-week high above $66, only to shed more than 2 percent on August 11, settling near $64.78. That pullback was triggered by rising oil prices, resurfacing inflation worries, and a reassessment of rate expectations. Yet buyers quickly stepped back in, and the metal has since clawed its way back to the mid-$65 range.
Momentum had been building well before that. On August 7, silver touched a six-week high near $64.10 ahead of US jobs data, supported by fading bets on further Fed tightening and geopolitical tensions in the Middle East. Three days later, weaker-than-expected employment figures pushed the price to $64.24, as traders scaled back expectations for additional rate hikes.
The recent rally is largely a monetary policy story. Early August saw hopes for a more cautious Fed — combined with a structurally tight physical market — drive prices to $62, the highest level since July 6. Since then, each round of soft US economic or inflation data has tended to lift silver, as it lowers the odds of a more restrictive policy stance.
Notably, silver has been outperforming gold. At the start of August, the gold-silver ratio stood near 68, with spot silver around $59.82. A declining ratio is widely read as silver gaining ground relative to gold — a trend that has likely extended given the metal's subsequent climb to roughly $65.
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Geopolitics and Yields Trigger a Fresh Setback
Wednesday brought a sharp reminder of how quickly sentiment can flip. Silver gave back around 4 percent after fresh attacks on cargo ships in the Strait of Hormuz and rising US Treasury yields ahead of the release of FOMC meeting minutes. President Trump had publicly described the strait as "US territory," while reports of Iranian military preparations intensified supply concerns in the energy sector — stoking inflation fears and pushing investors to price in higher bond yields.
Market participants currently see a 32 to 40 percent probability of a September rate hike, and they are scanning the July meeting minutes for further clues on the Fed's trajectory. The US national debt, meanwhile, is closing in on $40 trillion — sitting at $39.93 trillion according to the Treasury Department — a figure long-term silver bulls cite as a structural argument for holding hard assets.
Supply Deficit Widens for a Sixth Straight Year
The short-term sell-off stands in stark contrast to the fundamental picture painted by the Silver Institute, which released its latest projections just a day earlier. The industry body forecasts a global silver deficit of 46.3 million ounces for 2026, up from 40.3 million ounces the prior year — marking the sixth consecutive year of shortfall, even as mine production stagnates.
Demand is being underpinned by the buildout of AI data centers and the automotive sector, where electric vehicles can contain up to 50 grams of silver each. That momentum is helping offset current weakness in the solar industry.
China is adding another layer of complexity to the supply picture. Beijing has introduced a new licensing regime for 2026/2027 that, according to commodity sector sources, controls 60 to 70 percent of global exports of refined silver — despite the country accounting for just 13 percent of worldwide mine output. That concentration of export control in a single player is viewed as a fresh source of uncertainty for global supply chains.
Project News and Chart Signals
On the corporate front, Silver Mines Limited released a new feasibility study for its Bowdens Silver Project in Australia, confirming increased ore reserves and an extended mine life of 26 years — a reminder that the supply side won't be relieved anytime soon.
Technically, analysts have been tracking a "falling wedge" pattern in the price chart between January and August. A sustained breakout above $72 would signal a potential move toward $100, according to chart watchers. Wednesday's pullback, however, pushes the metal further from that threshold and underscores how short-term geopolitical and monetary headlines can overshadow an otherwise tight supply picture.
For now, traders are caught between two forces: near-term rate expectations and geopolitical risk premiums on one side, and a persistent structural supply gap on the other. The FOMC minutes due later Wednesday could offer the first hint of which dynamic will win out in the weeks ahead.
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