Silver's 5.7% Slide Puts Rate Expectations Back in Charge

COMEX silver settled at USD 61.03/oz, down 5.7% in a day and 14% year-to-date, as dollar strength and rising yields outweigh supply-demand factors.

Silver bulls are being forced to wait. A decisive turn in US monetary policy expectations, rather than any shift in the metal's own supply-demand picture, has taken control of the price — and the coming week's data calendar will determine whether that grip tightens or loosens.

Monday's session delivered the clearest evidence yet. The COMEX front-month contract settled at USD 61.03 per troy ounce, a single-day loss of 5.7%. The weakness carried into Tuesday, with the quote touching its lowest level since early August before a modest technical rebound emerged during the session. Overbought technical indicators offered brief support, though recovery attempts quickly ran into fresh selling. Year-to-date, the metal is now down 14%.

Dollar Strength and Rising Yields Set the Tone

The mechanics behind the move are straightforward. A firmer US dollar, trading near a two-month high according to Reuters, and climbing US Treasury yields have combined to erode the appeal of a non-yielding asset. For holders of silver, higher returns on fixed-income securities raise the opportunity cost of staying invested in bullion.

The yield backdrop has been reinforced by inflation worries and expectations of continued tightening from the Federal Reserve. Roughly two weeks after the central bank raised its benchmark rate, market participants are now pricing in the possibility of further hikes — a reassessment that has shaved 7.1% off silver since that decision. The trigger for the shift in rate thinking was a run-up in energy prices: US President Donald Trump rejected an Iranian proposal for talks over the Strait of Hormuz, pushing crude oil higher. Fears of renewed price pressure fed speculation that central banks will stay disciplined on rates.

A Data-Heavy Week Ahead

Attention now turns to a trio of US releases that could settle the question of whether rate expectations stay elevated. Tuesday brings the JOLTS job openings report for August. On 30 September, the PCE inflation gauge — closely watched by the Fed — follows for the same month. The official US labor market report on 2 October rounds out the sequence.

Refining Backlogs Meet Structural Demand

Away from the macro picture, the physical side of the market is drawing fresh scrutiny. Josh Phair, CEO of Scottsdale Mint, said in an interview that refining delays are running three to four months behind, depending on the material. He was quick to add, however, that finished metal remains adequately available in the United States.

Longer-term observers see reasons for optimism that have little to do with this week's price action. Speaking at an industry event on Monday, representatives of miner First Majestic Silver pointed to emerging sources of demand beyond traditional uses — data centers built for artificial intelligence, solar panels and solid-state batteries could all generate additional consumption. Brokerage CLSA, in a 17 September assessment, described the market as similarly stretched, projecting a physical deficit of 46.3 million ounces for full-year 2026, following a shortfall of 40.3 million ounces in 2025. CLSA also estimated that roughly 762.1 million ounces have been drawn from above-ground inventories since 2021.

For now, though, the broader rate and currency story holds the upper hand. As long as foreign exchange markets signal dollar strength and rate anxieties dominate, near-term catalysts for a sustained reversal remain scarce — and the upcoming economic reports will serve as the next signpost.