Fed Hawkishness Overpowers COMEX Squeeze as Silver Slides 4%

Silver slid 4% to $64.93 as Williams called another hike 'reasonable,' even as exchange inventories drain and a sixth deficit looms.

Silver bulls ran into a wall of hawkish Federal Reserve rhetoric on Wednesday, with the white metal surrendering 4.0% to close at $64.93 an ounce on the COMEX in New York. The retreat came despite a wave of physical demand that has been steadily draining exchange warehouses and tightening available supply.

Williams Keeps the Door Open for More Tightening

The immediate trigger for the selloff was commentary from John Williams, president of the New York Fed, who told Reuters in London that another hike to the U.S. benchmark rate before year-end was a "reasonable" prospect given persistent inflation risks. Price growth has now overshot the central bank's target for five consecutive years, Williams noted, describing it as the single biggest challenge facing policymakers. He also pointed to the resilience of the U.S. economy, which he said is being underpinned by heavy investment and robust demand in the artificial intelligence sector. Fed Governor Michael Barr echoed that view, arguing additional rate increases may be needed to contain price pressures.

Yields at Multi-Year Highs Raise the Bar for Bullion

The prospect of rates staying elevated — or climbing further — creates an uncomfortable backdrop for assets that pay no income. Higher yields on fixed-income securities lift the opportunity cost of holding precious metals, while a firmer dollar makes commodities more expensive for buyers outside the U.S., crimping global demand. Bond markets reflected the shift in expectations almost immediately: the yield on ten-year Treasuries pushed above 5.1%, a level not seen in years. The accompanying debt selloff rippled across raw materials, dragging gold and platinum lower alongside silver.

Physical Tightness Tells a Different Story

Yet the paper-market weakness stands in sharp contrast to conditions on the ground. Delivery notices for the September contract totaled 6,168, covering 30.84 million troy ounces. That haul showed up directly in exchange inventories, with roughly 7 million ounces leaving registered depots in a single week, according to media reports — extending a drawdown that has been building for months.

CME Group warehouse data put total stocks at 338.1 million ounces (10,515 metric tons) at the start of September. Of that, 238.7 million ounces sat in the "eligible" category, while 99.4 million ounces held "registered" status, meaning it is available for immediate delivery.

A Structural Deficit Meets Regulatory Headwinds

The steady bleed of metal from exchange vaults fits into a broader supply gap. The Silver Institute's World Silver Survey 2026, published April 15, recorded a fifth straight annual shortfall last year and projected a sixth consecutive deficit of 46.3 million ounces for 2026, alongside an 18% jump in expected physical investment demand.

Policy moves in key consumer markets are adding friction. India's government imposed extra licensing requirements on silver imports from mid-May, Reuters reported, causing inbound shipments to collapse to 46.8 tons in May from 534.3 tons a year earlier.

Chart Levels in Focus After the Drop

Wednesday's slide left the contract hovering just above its 50-day moving average of $64.80, a line traders watch as a gauge of medium-term direction. The metal remains far below its record peak: silver touched an all-time high above $121 an ounce on January 29, and after the subsequent correction it sits 44% below its 52-week top. While the recent delivery surge has helped steady prices through September, the tug-of-war between supportive physical fundamentals and a hawkish rates outlook continues to dictate the near-term trading picture.