Silver Trades Half Off Its Peak as Miners Lag, Vaults Swell and the Fed Looms

Silver trades at $60.55/oz, 50% below its 52-week high, as LBMA delegates see $94.70 while COMEX inventories hit an eight-month high.

Silver is caught between two opposing forces, and the market is struggling to decide which one wins. The metal changed hands at $60.55 an ounce on the COMEX on Monday, a session that ended with a 0.9% loss. That level leaves it 50% below its 52-week high of $121.78 — a gap that tells its own story about how far sentiment has traveled from last year's heights.

A Supply Machine That Cannot Speed Up

The case for a re-rating rests on something more stubborn than sentiment: the physical difficulty of bringing new silver to market. Kenny Zhu, research director at Sprott, puts industrial consumption at 50% to 60% of total demand, with the remaining 40% to 50% tied to monetary and investment purposes. Rising prices, however, do not translate quickly into rising output.

The reason is geological. Silver is mostly extracted as a by-product of copper, lead and zinc mining, which means supply responds to price signals only after a long delay. Zhu also points to a thin free float of physical metal. Combine that with flows into exchange-traded funds, and the stage is set for outsized moves once institutional and retail interest returns in force.

Conference Optimism Meets a Glut of Metal

Delegates at the LBMA Global Precious Metals Conference are betting on exactly that. A survey of attendees produced an average twelve-month price expectation of roughly $94.70 an ounce, driven by continued industrial and investment demand. The figure reflects the mood in the room rather than any official target from the industry body, and the same gathering heard reports of declining silver consumption in certain industrial segments.

The bearish counterweight is visible in the warehouses. Research house Mirae Asset reported last Friday that registered COMEX silver inventories had climbed by more than 6.50 million ounces since September 25, reaching 102.81 million ounces — an eight-month high for the New York futures exchange. Deutsche Bank added its own note of caution, with media reports indicating the lender sees a supply surplus forming as early as 2027, citing swelling stockpiles and softening industrial demand. For the second quarter of 2027, the bank projects an average spot price of $70 an ounce.

Rates, the Dollar and a Date With the CPI

Macro conditions have been working against the metal in the near term. Signals from the Federal Reserve's meeting minutes, a firmer US dollar and elevated Treasury yields pushed the price briefly toward $59 last week.

The Fed raised its policy rate by 25 basis points in September to a range of 3.75% to 4.00%. Vice Chair John Williams sees room for another hike this year but no need for further tightening in 2027, provided inflation converges on the 2% target as expected.

Chart watchers have plenty to work with. At $60.55, silver sits below its 50-day moving average of $65.01, with support clustered around $57.42 and $55.50. Should buyers defend that zone, the next obstacles on the way up stand at $62.29 and $67.16.

The immediate catalyst arrives Wednesday, when the US Bureau of Labor Statistics publishes September consumer price data. The inflation reading will shape rate expectations ahead of the Federal Open Market Committee's decision on October 28. For now, traders are weighing whether the rate environment keeps the pressure on or whether the structural tightness of mine supply is enough to put a floor under prices.