Silver Rebounds From 6% COMEX Rout as Fed Chief Takes the Stage in Bangkok

Silver found firmer footing on Friday, lifted by retreating US Treasury yields and a softer dollar as traders scaled back bets on another Federal Reserve rate hike this month. The reprieve came after a bruising stretch that had left the metal under heavy pressure.

The shift in sentiment follows a turbulent few sessions. Midweek inflation data stoked fears that the US central bank might keep its tightening stance in place for longer than hoped.

Inflation Data Trigger Midweek Selloff

The US consumer price index climbed 0.6% in September from the prior month and 3.7% year-on-year. Energy stood out, surging 20.4% annually amid the Iran conflict and the accompanying jump in oil prices.

Those figures set off a wave of selling on Wednesday, with silver tumbling 6.0% on the COMEX to $55.80 per troy ounce. Producer prices also signaled persistent inflationary pressure, pushing US yields higher and briefly hoisting the dollar to near an 18-month peak.

Commodity analyst Florian Grummes and trading expert Christian Habeck pointed to the drag from rising yields and a correction following the summer rally. Remarks from St. Louis Fed President Alberto Musalem about a possible further tightening added to the cautious mood.

Markets at one point priced a December rate increase with near-99% probability, according to media reports. Because silver pays no yield, it tends to suffer when rates rise and the dollar strengthens, and the price reacted immediately.

Warsh Speech and CFTC Report in the Spotlight

Attention now turns to Washington and the Fed's next policy move. Fed Chairman Kevin Warsh is due to speak at the International Monetary Fund's annual meetings in Bangkok, and his tone will be closely watched for signals on the months ahead.

At the same time, the US derivatives regulator CFTC releases its weekly report on speculative positioning, offering a read on how far institutional investors have already adjusted their exposure after the recent swings.

Friday's pullback in bond yields has eased conditions for the metal, with Reuters noting a first countermove on Thursday. Whether that impulse holds depends largely on the message Warsh delivers in Thailand. Market watchers also flag continued headwinds from elevated crude oil prices tied to the Iran war, which are keeping the inflation backdrop uncomfortable.

COMEX Inventories Climb as Chinese Stocks Track Higher

Alongside the rates debate, the physical supply picture is drawing scrutiny. The CME Group reported midweek that COMEX silver inventories rose by 1.2 million troy ounces to a total of 333.2 million ounces.

Of that, 103.1 million ounces sat in the "registered" category and 230.1 million ounces in "eligible." Asia shows a similar trend: industry service Shanghai Metals Market put Chinese social silver stocks at 3,909 tonnes as of Thursday.

Longer-Term Balance in Question

The build in inventories is feeding debate about the market's longer-term balance. Deutsche Bank said on October 7, according to media reports, that a supply surplus in the global silver market was possible for 2027, citing rising stockpiles alongside fading momentum in industrial demand.

Skepticism is also visible in the longer-term price picture: silver is down 21% year-to-date and remains well below the highs reached in recent months. Friday's CFTC positioning report will show how aggressively institutions have already trimmed their bets against that backdrop.