Silver Holds $64 Line as Solar Demand Fade Collides With a Hawkish Fed

Silver settles at $64.19 as 10-year Treasury yields hit 5.04%. J.P. Morgan warns solar thrifting could cut 60 million ounces of demand in 2026.

Silver is proving stubbornly resilient even as two powerful forces pull it in opposite directions. Ahead of the Federal Reserve's rate decision on Wednesday, the metal is clinging to a narrow trading band, defending key support levels while a darker demand picture takes shape beneath the surface.

Tuesday's COMEX front-month contract settled at $64.19 an ounce, a modest daily gain of 0.7%. That firmness came despite a punishing backdrop: ten-year US Treasury yields touched 5.04% during the session, the highest reading since 2007.

A Fed Move That Markets Have Already Priced In

Traders are assigning better than 90% odds to a quarter-point hike on Wednesday, which would lift the benchmark rate to a range of 3.75% to 4.00%. It would mark the first increase since July 2023. The catalyst is US inflation, which held at an annual 3.4% in August and remains well above the central bank's target.

Energy markets are adding to the price pressure, with Brent crude last quoted above $107 a barrel. Rising rates typically raise the opportunity cost of holding non-yielding assets like silver. Even so, buyers have repeatedly stepped in below the $64 threshold.

Attention now turns to the policy stance under Fed Chair Kevin Warsh and the press conference that follows. Goldman Sachs economists expect the 25-basis-point move but anticipate that policymakers will stop short of locking in a rate path for upcoming meetings. For precious-metals investors, the open question is how many more hikes could land this year. Parts of the market are pricing a second tightening by year-end, while political pressure from Donald Trump's circle continues to push for lower rates.

Solar's Thrifting Problem

On the demand side, a structural shift is underway. J.P. Morgan warns that photovoltaic-industry consumption could take a significant hit in 2026, with thrifting and material substitution cutting usage in that segment by roughly 30% — equivalent to a decline of about 60 million ounces.

The broader industrial picture is cooling in step. The Silver Institute projects industrial fabrication falling 2% in 2026 to around 650 million ounces. Total supply, meanwhile, is seen rising 1.5% to roughly 1.05 billion ounces, helped by a 7% jump in recycling. Even with that extra metal, the global market is set to remain in deficit for a sixth straight year.

Institutions Trim Their Exposure

Institutional investors are already adjusting. The iShares Silver Trust cut its holdings by 25.29 tonnes yesterday, bringing its total stored volume to 15,266.31 tonnes. The pullback among large players reflects a wait-and-see mood, with rate worries and sturdy bond yields temporarily dulling the appeal of a metal that pays no coupon.

The futures tape tells a similar story of caution. Monday's COMEX front-month close came in at $63.76 an ounce, capping a seven-day loss of 6.1%. Chart watchers are focused on the 50-day moving average of $63.61, a line the price is currently wrestling with.

Where the Analysts See Silver Heading

J.P. Morgan looks for silver to average around $63 an ounce in the fourth quarter. LBMA-surveyed analysts paint a far wider canvas for the full year, with forecasts spanning $44 to $83. Which way the pendulum ultimately swings will hinge on how demand from consuming industries evolves.

Technically, the white metal is consolidating after the violent swings of recent months. Despite stabilizing near $64, it remains 47% below its 52-week high of $121.78, set at the end of January. Wednesday's verdict — and the signals it sends for the months ahead — should determine the next directional move.