Silver's Rally Is a Study in Contradictions: Weak Jobs Data, a Fed Power Struggle, and a Supply Squeeze That Won't Quit

Silver rebounds above $64 amid weak jobs data, reduced Fed hike odds, and unprecedented political pressure on the central bank.

Silver kicked off the week with a decisive push back above the $64-per-ounce threshold, extending a rebound that has traders juggling a curious mix of signals: softening rate-hike bets, an unprecedented political assault on the Federal Reserve, and a physical market that keeps bleeding supply even as industrial demand falters.

The immediate catalyst is familiar by now. Friday's US employment report for July showed the economy shed 23,000 jobs, a far cry from the 80,000 gain economists had penciled in, with May and June figures also revised lower. The unemployment rate ticked up to 4.1 percent. That data has sharply reduced the odds of another Fed rate increase in September — from 67 percent to just 44 percent — and in doing so, it has made the zero-yield metal a more compelling store of value.

The price action tells the story of a volatile stretch. After touching a low of $56.71 last Monday, silver surged to $65.48 by Friday's close, then took a breather before settling Monday at roughly $64.20, up about a percent from the prior session's $63.55. The metal has now marked fresh multi-year highs, with gold also logging its third straight session of gains.

A Fed Under Siege

Yet the macro picture is anything but straightforward. Even with weak employment numbers, the central bank is still debating a September hike because inflation pressure hasn't abated. That internal contradiction is fueling wider market volatility, and it's compounded by an open conflict over the Fed's independence.

President Donald Trump has moved to remove Fed Governor Lisa Cook via letter, accusing her of dereliction of duty — an offense he claims could carry a theoretical prison sentence of up to 30 years. The Supreme Court in June issued a temporary stay allowing Cook to remain in her post, but the ruling only paused Trump's earlier removal attempt without settling the underlying legal questions. Fed governors can only be dismissed for cause under current law, and no such removal has occurred since the central bank's founding in 1913. Acting Fed Chair Kevin Warsh has been in his role only since May 22.

Trump has openly demanded the lowest interest rates in the world. The combination of political pressure and an unresolved rate path is eroding confidence in the Fed's predictability — precisely the kind of environment that drives investors toward hard assets. Jim Caron, chief investment officer at Morgan Stanley Investment Management, has warned that a surprisingly hot inflation reading could put the Fed in a serious bind and intensify the rate debate, a scenario that would likely stoke further demand for tangible assets like silver.

The Technical Picture Lines Up

On the charts, silver has completed a bullish head-and-shoulders pattern above the $63.30 level, according to FXStreet, with the implied target sitting at $67.17 — the metal's year-to-date high from June. Should the price retreat, traders are watching $63.30 as the first support, followed by $61.00 and $59.40.

Speculative positioning remains elevated, though slightly less exuberant than in gold. Net-long exposure in silver futures stood at 72 percent, down from 73 percent the prior week, while gold's net-long ratio climbed to 89 percent. The gold-silver ratio has narrowed to 67.68 from 68.32 on Friday, signaling silver's recent outperformance relative to its yellow counterpart. Still, silver remains down 9.63 percent for the year, a reminder that the weekly rally has yet to erase broader losses.

A Supply Gap That Defies the Demand Picture

The fundamental backdrop adds another layer. The global silver market is running its sixth consecutive year of supply deficit, with the shortfall expected to widen by roughly 15 percent versus last year. What makes this notable is that demand from the solar industry — traditionally a major consumer of industrial silver — has weakened considerably. That the price is rising anyway suggests investment and hedging demand is more than offsetting the softer industrial appetite.

UBS recently trimmed its silver price target for this year to $80, following a sharp spike and subsequent pullback in the market — a signal that even in a structurally tight market, setbacks remain possible. Longer-term forecasts from market observers paint a wide band of outcomes: a range of roughly $31.77 to $62.53 for the current year, with 2027 projections stretching to nearly $88.45.

On the producer side, the strength is visible in earnings. Heliostar Metals reported record second-quarter 2026 gold production of 14,803 ounces and silver output of 79,710 ounces from its La Colorada and San Agustin mines. Revenue reached $56.5 million, with operating mine earnings of $31.1 million and net income of $8.0 million. All-in sustaining costs of $2,287 per ounce came in above the company's own guidance range of $2,025 to $2,125. The company forecasts full-year silver production between 290,000 and 320,000 ounces, holding $43.0 million in cash and no debt.

What Comes Next

How far this rally can run is a matter of debate. Chart analyst Northstar sees a long-term target of $250 to over $260 based on a cup pattern spanning more than 50 years, but also warns of a potential near-term pullback to the $50–$55 zone.

For now, the market's focus shifts to Wednesday's US consumer price index, followed by producer prices on Thursday. Those prints will go a long way toward determining whether the Fed holds its pause — and whether silver can finally clear the $67 hurdle. The September rate decision and the ongoing fight over the Fed's leadership will likely remain the dominant forces shaping the metal's trajectory in the weeks ahead.