Silver Slips as Fed Jitters Collide With a Widening Supply Gap
Published on 10/20/2026 at 06:51 | Editorial boerse-global.de
Silver traders are marking time. With the Federal Reserve's next policy meeting set for 27–28 October, the metal's spot price eased 0.7% on Tuesday to $56.69 an ounce, according to Reuters, as investors weighed the interest-rate outlook and digested macroeconomic data that did little to lift sentiment.
The retreat follows a Friday close of $57.13 an ounce for the COMEX front-month contract. Over the past 30 days, the futures market has shed 14%. Even so, the metal sits 26% above its 52-week low of $45.51, and buyers have repeatedly defended the $55 support line. Chart watchers note the price remains 11% below its 50-day moving average — a sign that momentum, for now, belongs to the bears.
Rate Expectations Swing on Inflation Data
The policy backdrop explains much of the hesitancy. Remarks from Fed Chair Kevin Warsh offered no firm steer on the impending decision, and media reports put the market-implied probability of a rate hike at roughly 16.1%. That is a sharp pullback from mid-last week, when September inflation data jolted the futures market: US consumer prices rose 3.7% year on year, while core inflation ran at 0.3% month on month. The headline figure, which overshot forecasts, briefly revived fears of a firmer hand from policymakers and triggered heavy selling in derivatives.
For a metal that pays no yield, the prevailing level of US rates remains a stiff headwind against interest-bearing alternatives. Reports also pointed to December hike expectations spiking at one stage before stabilising, though nerves ahead of the October gathering are still palpable. Most participants appear reluctant to make big new commitments until the Fed has spoken.
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Physical Tightness Builds Beneath the Surface
Strip out the rate noise and the supply picture looks considerably more supportive. Metals Focus forecasts a global shortfall of about 46.3 million ounces for full-year 2026, up from a 40.3 million-ounce deficit the year before — the sixth consecutive annual shortfall. The Silver Institute expects worldwide mine output to slip 0.3% to 844.1 million ounces over the same period.
Disruption at individual producers is compounding those structural constraints. Roughly 800 workers at the San Dimas mine in Mexico walked out about two weeks ago, and at the operation — run by First Majestic Silver — third-quarter silver production had already collapsed 41% year on year, according to company figures.
Inventories, meanwhile, are moving in the opposite direction. LBMA data show silver stocks held in London climbed 3.22% in the third quarter to 28,985 tonnes as of 30 September. At COMEX in New York, vault holdings stood at 334.87 million ounces at the start of the week, of which 103.1 million ounces were classified as immediately deliverable.
A Divided Market Looks Past the Near Term
That combination of limited new production and healthy physical stockpiles forms the fundamental scaffolding on which many participants have built their longer-range views. Industry specialists have turned more constructive despite the recent price weakness, a stance that points to a medium-term recovery even as policy uncertainty and patchy industrial demand keep a lid on momentum.
The tension between the two forces — a Fed still wrestling with sticky inflation and a physical market heading for its sixth straight deficit — leaves silver caught near $57, with the October decision likely to set the next direction.
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