Silver Trades at Half Its Peak as Bond Yields and Dollar Strength Keep the Squeeze On

COMEX silver settled at $60.76 an ounce, down 1.8%, as traders await ISM manufacturing data and the September US employment report.

Rising yields on US Treasuries have left silver with little room to breathe, pushing the metal back toward the $60 mark per troy ounce as traders brace for a fresh round of American economic data. The front-month COMEX contract settled Wednesday at $60.76 an ounce, down 1.8% on the day — a level that leaves the precious metal exactly 50% below its 52-week high of $121.78.

The retreat has been building for weeks. Over a 30-day window, silver has given up 7.8%, with the geopolitical fallout from the Strait of Hormuz escalation roughly three weeks ago accounting for a 5.2% slice of that decline. Higher energy costs stemming from the disruption have fed second-round effects into inflation expectations, and market participants have responded by rotating away from industrial metals toward dollar-denominated liquid assets, according to media reports.

Soft Inflation Data Fail to Shift the Mood

Even a weaker-than-expected reading on US PCE inflation did nothing to lift sentiment. What matters more to commodity markets right now is the fear that the Federal Reserve will keep its restrictive policy stance in place, and investors are taking their cues from stubbornly elevated bond yields rather than from softening price data. The combination of a firm dollar and attractive fixed-income returns has sharply raised the opportunity cost of holding a metal that pays no yield.

European investors have been voting with their feet. Net outflows from silver ETCs reached EUR 1.6 billion in the first eight months of the year, according to Deutsche Börse, as holders steadily trimmed their exchange-traded positions while the price largely moved sideways. Periodic rallies in the US dollar added further headwinds to the commodity complex, media reports noted.

A Physical Market Running in Two Directions

Beneath the paper-market gloom, the physical picture is more nuanced. A spring study by the Silver Institute and research firm Metals Focus projected a full-year 2026 market deficit of 46.3 million ounces against total global supply of 1,066.4 million ounces. That persistent shortfall has acted as a stabilizing counterweight over the longer term, even as near-term pressures mount.

Refining capacity tells its own story. Josh Phair, CEO of the Scottsdale Mint, said silver refining is currently running three to four months behind depending on the material involved, while sufficient stocks of refined finished metal remain available in the US. The split between raw processing delays and ready end-product supply underscores how uneven the tightness is across the supply chain.

Chart Signals Diverge From Long-Run Optimism

Technical analysts are not offering much comfort either. Research provider JKCM rated silver's medium-term outlook as slightly bearish on September 29, citing the breach of September support and higher real holding costs as the main drags. The firm nonetheless acknowledged that expectations of a sustained market deficit provide a stabilizing force further out.

The sell-side remains more constructive. UBS reaffirmed its positive view on Wednesday, arguing that silver will stay closely tethered to gold's trajectory while both private investment demand and industrial consumption lend support in the months ahead. The Swiss bank forecasts silver reaching $70 an ounce by December 2026.

Data in the Driver's Seat

For now, traders have their attention fixed squarely on the US calendar. The ISM manufacturing purchasing managers' index lands today, followed by tomorrow's official September employment report. Those releases should clarify whether the Fed can maintain its tight course through the remainder of the year — and, by extension, where bond yields and the dollar head next. Until then, silver's path of least resistance appears to run through the Treasury market rather than through its own supply-demand fundamentals.