Silver Rebounds 1.3% as Williams Tempers October Rate-Hike Odds

COMEX silver settles at $61.84, up 1.3%, after Williams signals no rush to tighten. October hike odds fall to about 50% from above 70%.

Silver futures snapped back on Tuesday, with the COMEX front-month contract settling at $61.84 an ounce for a gain of 1.3% on the day, after New York Fed President John Williams signalled that policymakers see no rush to tighten again and would rather wait for incoming economic data first. The remarks pulled the market-implied probability of an October rate increase down from above 70% to roughly 50%, easing some of the pressure that had been building on the metal.

Softening crude prices added to the reprieve, though traders kept one eye fixed on the upcoming release of US PCE inflation figures for August.

The bounce follows a bruising stretch for the precious metal. Brent crude had earlier surged to $107 a barrel after US President Donald Trump rejected an Iranian peace proposal, stoking fresh fears of sustained price pressure. US Treasury yields climbed to 19-year highs in response, while the dollar strengthened — a combination that squeezes silver from two directions, since a firmer greenback makes commodities costlier for buyers outside the US and elevated bond yields raise the opportunity cost of holding a non-yielding asset.

The $60 Line in the Sand

Heraeus sees the round $60-per-ounce level as the decisive test for silver's medium-term uptrend. A break below that psychological threshold could trigger further chart-driven selling; if it holds, market watchers point to initial resistance around $62.

The metal's retreat has been steep. Monday's COMEX front-month close came in at $61.03 an ounce, leaving silver 50% below its 52-week high set at the end of January and down 14% year-to-date. Since the Fed raised its benchmark rate by 25 basis points roughly two weeks ago, the metal has shed between 5.9% and 7.1% of its value, depending on the measurement point.

Fed policy remains the dominant variable. Williams suggested at most one more hike might be needed this year, while colleagues such as Governor Michael Barr continue to argue for additional tightening. TD Securities noted that persistently high yields are eroding silver's appeal.

Producers Take the Brunt

The correction is hitting mining companies disproportionately, thanks to their operating leverage. Assuming all-in costs of $40 an ounce, a price drop from $66 to $61 reduces operating margins by about 19%. Shares of producers including Pan American Silver, Hecla Mining and First Majestic Silver have come under selling pressure as a result.

Longer-term supply dynamics, however, tell a different story. Goldman Sachs analysts point out that building new mine and smelter capacity takes years, meaning supply can barely be scaled up if demand revives — a setup that could fuel sharper price swings down the road. UBS projects a recovery to $70 an ounce by the end of 2026.

A Physical Market That Won't Loosen

Beneath the macro noise, the structural deficit persists. The Silver Institute's World Silver Survey 2026 puts the physical shortfall at 46.3 million ounces, the sixth consecutive year of deficit, with China's export restrictions in place since January adding to the squeeze. Not every demand segment is cooperating, though: the same report forecasts a 19% decline in photovoltaic demand. Investors are left weighing whether the persistent physical tightness can offset the drag from high policy rates and weaker industrial appetite.

Near-term direction now hinges on US inflation and labour-market data. Market participants are also monitoring trade developments after government representatives agreed on a short-term extension at last Friday's US-China summit, where artificial intelligence issues were also discussed. The deal briefly stirred speculation about future industrial demand but failed to durably ease the recent downward pressure.