Silver's Supply Squeeze Eases as Refiners Lag and Yields Bite

COMEX silver ended Friday at USD 60.71/oz, down 14% this year. September delivery hit 33.865M oz; October opened with just 57 contracts.

Silver traders closed out September with a flurry of physical delivery activity before the October contract cycle opened to a far quieter reception, while a backdrop of multi-decade-high bond yields and shifting industrial demand keeps the metal's direction in flux.

September's expiry saw 6,773 standard contracts settled, representing 33.865 million troy ounces, alongside 1,945 micro contracts. The October cycle that followed got underway with just 57 contracts served and taken up — a markedly calmer start. Even so, the metal's broader trajectory remains under pressure: COMEX silver finished Friday at USD 60.71 per troy ounce, leaving it down 14% since the start of the year and sitting roughly 50% below its 52-week high.

Yields at 2002 Highs Weigh on Bullion

The headwind from fixed income has been unrelenting. According to Reuters, yields on ten- and 30-year US Treasuries climbed last week to their highest levels since 2002. A firm dollar and elevated interest rates are sapping appetite for non-yielding assets, and silver has felt the chill.

Some relief arrived via the US labor market report, which showed just 29,000 new jobs created — a weaker-than-expected print that softened expectations for further tightening. Market participants now look ahead to a busy data calendar: services purchasing managers' indices for the US and the eurozone are due Monday, followed on Wednesday, October 7, by the release of the latest Federal Reserve meeting minutes, which could shed more light on the rate path.

London Stocks Recover, Chinese Solar Demand Dims

On the physical side, supply conditions appear to be loosening. The Deutsche Bank assesses that freely available silver inventories in London have recovered noticeably, reaching their highest level since November 2024. At the same time, a key industrial demand driver is fading: Chinese solar sector demand is expected to run about a third below the prior year's level in 2026.

That projection sits awkwardly against forecasts issued barely a week earlier, when Metals Focus and the Silver Institute still penciled in a sixth consecutive annual deficit for 2026, estimated at roughly 46 million ounces.

Exchange warehouses tell a similar story of replenishment. COMEX inventories rose by about 2.5 million ounces in the week to September 25, reaching a total of 332.6 million ounces. Registered stocks shed one million ounces, while eligible holdings added 3.5 million ounces.

Refining Backlogs Persist Despite Ample Finished Metal

Processing capacity remains a bottleneck even as stockpiles build. Josh Phair, CEO of Scottsdale Mint, said in an interview that silver processing at refineries is running three to four months behind, depending on the material. Finished refined silver, by contrast, is sufficiently available in the United States.

Geopolitical friction has added another layer of uncertainty. In late September, US President Donald Trump rejected an Iranian proposal, relayed through Qatar, to reopen the Strait of Hormuz. The lingering tensions periodically stoked inflation and rate concerns.

Trading Infrastructure Set for Structural Shift

Changes are also coming to the mechanics of the market itself. Market participants will gain the ability to react immediately to geopolitical events and macroeconomic shifts outside traditional trading hours, a structural innovation that could alter how the metal responds to headline risk.