Silver Trades Near $63 as Traders Brace for First Fed Hike Since 2023

Silver trades around $63/oz as markets await a likely Fed rate hike, with COMEX futures down 1.9% and technicals showing caution.

Silver is marking time around the $63-a-troy-ounce line, with buyers staying on the sidelines ahead of a Federal Reserve decision that could deliver the first U.S. rate increase in more than two years. The metal's hesitation reflects a market caught between a hawkish policy tilt and a physical demand story that keeps refusing to fade.

Monday's session offered a taste of that caution: the COMEX futures contract shed 1.9% to settle at $63.76 an ounce, extending a consolidation that has run for several days. Precious metals, which pay no coupon, tend to lose their shine when fixed-income alternatives start offering real returns again, and that dynamic is very much in play right now.

A Quarter-Point Move Is All but Priced In

The Federal Open Market Committee began deliberations today, with the rate announcement due Wednesday evening German time, followed by a press conference from Fed chief Kevin Warsh. Futures markets assign roughly a 90% probability to a 25-basis-point increase, which would lift the target range from 3.50%–3.75% to 3.75%–4.00%. A Reuters survey of 101 economists found 86 expecting exactly that outcome.

Should the move materialize, it would be the central bank's first rate hike since July 2023 — a milestone that explains much of the nervousness rippling through commodity desks.

Inflation Keeps the Pressure On

The case for tightening rests on price growth that remains stubbornly above the Fed's 2% objective. U.S. inflation ran at 3.4% in August, and the month-on-month consumer price index rose 0.4%. Those prints, combined with geopolitical friction and crude oil trading above $100 a barrel, have hardened expectations that policymakers will stay on the front foot.

Bond markets have already voted. The yield on ten-year Treasuries briefly pushed past the 5% threshold, a level that erodes the appeal of non-yielding assets and simultaneously hands the dollar a tailwind. The greenback climbed to a two-week high against a basket of peers, making dollar-denominated silver more expensive for overseas buyers and further crimping demand.

Chart Levels and Positioning Tell a Cautious Story

From a technical standpoint, silver is hovering right at its 50-day moving average of $63.61, sitting a fraction — about 0.2% — above that short-term reference point. The picture looks less comfortable further out: the 200-day average sits at $73.42, leaving the metal roughly 13% below its longer-term trend line.

Market mechanics reinforce the wait-and-see mood. According to TD Securities, trend-following funds have trimmed their futures positioning to only a modest net-long. Traders are also watching the $63 support zone closely; a break below it could trigger a fresh wave of selling.

Industry Demand Offers a Longer-Term Floor

Beneath the short-term noise, the fundamental backdrop remains constructive. Global supply fell short of worldwide demand in 2024 for a fourth consecutive year, with photovoltaic buildouts and electronics components driving steady consumption. Market watchers also point to growing requirements from modern data-center infrastructure, which gives silver a durable demand base even when monetary policy turns restrictive.

That structural support, however, is unlikely to override the immediate pull of the Fed. If U.S. policymakers confirm tighter conditions on Wednesday, volatility across precious metals looks set to stay elevated — and Washington's verdict will be parsed with considerable tension.