Silver Clings to $61 Handle as ETC Outflows and Dollar Strength Keep Bulls in Check

Silver sits near two-month lows as soft US jobs data and a firm dollar weigh; ETC outflows hit EUR 1.6 billion in the first eight months.

Silver is struggling to find its footing after a bruising stretch, with the metal caught between soft US labor data and a resurgent dollar. On Monday, the front-month COMEX contract settled at $60.71 per troy ounce, hovering near two-month lows, while spot pricing edged 1.1% higher to close at $61.40 an ounce — still well shy of its 50-day moving average of $65.50.

Investors Pull Back as ETCs Bleed

The hesitation among market participants is hard to miss in positioning data, with large futures players keeping their exposure modest. European retail and institutional investors have been just as cautious. According to dpa-AFX, silver ETCs saw net outflows of EUR 1.6 billion across the first eight months of the year. While gold absorbed most of this year's inflows, silver suffered from its dual identity as both a precious and an industrial metal, which weighed on demand through securities products.

Mixed Macro Signals Ahead of Fed Minutes

Some relief arrived from the rates market last week. US nonfarm payrolls rose by just 29,000 in September, and revisions shaved a combined 60,000 jobs off the July and August prints. Yet the broader backdrop still caps any meaningful rebound. Elevated US Treasury yields and a firm dollar make holding non-yielding metals more expensive.

Inflation jitters are adding to the pressure. The Institute for Supply Management's services survey showed fading momentum, but its subindex for prices paid climbed to 74.0 — the highest reading since July 2022. That spike has cooled hopes for a quick pivot on rates. The minutes from the Federal Reserve's last meeting, due Wednesday, October 7, are expected to shed more light on the policy path.

Currency dynamics are doing silver no favors either. The dollar has drawn support from mounting political and fiscal tensions in the eurozone, with worries over France's budget position and snap elections in Spain dragging the euro to a 17-month low. A stronger greenback raises the cost of commodities for buyers outside the dollar bloc, sapping global demand. Year-to-date, silver is down 14%.

Geopolitical risk factors in the Middle East — typically a tailwind for safe-haven assets — are being overshadowed by the currency effect. Tensions around the Strait of Hormuz and President Donald Trump's recent rejection of an Iranian proposal have done little to lift the metal.

Chart Picture Still Clouded

Technically, the setup remains fragile. Market watchers point to key support just below the $61-per-ounce threshold. Only a sustained move back above recent interim highs would brighten the near-term outlook. Until then, the Fed's rate prospects and bond market moves are likely to set silver's direction.

Physical Demand Holds Steady

On the physical side, official exchange inventory data paint a stable picture. Mid-September saw significant delivery notices of 6,168 contracts for the September contract, equivalent to 30.84 million ounces, according to media reports. That settlement underscores the persistent delivery needs in institutional trading, even as the market waits for clearer monetary policy signals.