Silver Retreats From Two-Day Pop as Fed Tightening Bets and Hormuz Conflict Overshadow Supply Squeeze
Published on 09/11/2026 at 03:10 | Editorial boerse-global.de
Silver gave back part of its midweek advance on Thursday, slipping to roughly $66.68 per troy ounce after closing the prior session at $67.92 on the COMEX — a 2.3 percent gain on the day. That Wednesday jump had lifted the metal back above the $66 threshold and left it up 1.6 percent for the week, but the rally has since lost momentum as monetary policy concerns reclaimed center stage.
Rate Expectations Take the Wheel
The immediate driver behind Thursday's pullback has little to do with silver itself. Rising energy costs have rekindled inflation worries in the United States, and market participants now assign roughly a 70 percent probability to a rate hike in September, according to media reports. Fed Chair Kevin Warsh added fuel to that narrative, stating the central bank will still have "work to do" absent clearer evidence that inflation is returning to the 2 percent target — a remark widely read as a signal for a more restrictive stance.
That is unwelcome news for a metal that pays no yield. Higher rates raise the opportunity cost of holding silver, and the shift in expectations has been enough to stall the recovery that followed the metal's slide from a rebound high above $71. That earlier decline, triggered by Fed rate jitters, amounted to an 11 percent drop.
Geopolitics has compounded the pressure. After U.S. forces struck an island in the Strait of Hormuz, Iran retaliated with attacks on the United Arab Emirates and Jordan. Oil prices climbed for a second consecutive session, feeding inflation concerns and pushing rate expectations even higher.
A Fortnight of False Starts
The past two weeks have offered little in the way of a clear trend. Silver bottomed near $64.23 in early September, then traced a series of smaller swings between $65 and $67 before Wednesday's sharp move higher. Thursday's retreat has now trimmed that spike back somewhat.
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Even so, the technical picture remains constructive. At current levels, silver trades well above its 50-day moving average of $63.03 — a premium of 7.7 percent — pointing to an intact medium-term uptrend. The metal is still a long way from its January record of $121.78, however, sitting 44 percent below that peak.
Earlier in the month, silver had also drawn support from weak U.S. labor market data and Middle East tensions that drove investors toward safe havens. The metal remains caught in a environment where policy signals and economic data move prices more forcefully in the short run than the underlying supply picture.
The Physical Market Waits in the Wings
Beneath the day-to-day noise, the fundamental backdrop stays tight. Chinese export restrictions in place since January threaten to further constrict global supply, while mine output has stagnated — new extraction projects typically require seven to ten years of lead time. On the demand side, the electronics industry remains the largest industrial consumer of the metal, accounting for roughly 34 percent of usage.
Market observers continue to flag production and supply bottlenecks across the commodities sector as a structural tailwind for silver, even if that theme has faded into the background amid the current price action.
What Traders Are Watching
Two upcoming events are likely to set the near-term direction: the U.S. inflation report (CPI) on September 11 and the Federal Reserve's rate decision (FOMC) on September 16, 2026. Both are seen as potential turning points for dollar and rate expectations — and, by extension, for silver, which has traditionally been sensitive to real-yield moves.
A softer dollar and falling real yields would tend to give the metal further tailwind, while stubbornly hot inflation data could call the recent recovery into question. With 30-day annualized volatility already at 35 percent, the coming sessions look set to remain choppy. For now, the Fed's rhetoric and geopolitical headlines appear to carry more weight than the structural supply gaps that continue to build in the background.
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