Silver Tumbles 4% as Bond Rout and Fed Signals Overshadow Record Warehouse Drawdown

Silver slid 4% to $64.93 an ounce after a weak $70 billion Treasury auction pushed 10-year yields to 5.13%, the highest since 2007.

A weak reception for a $70 billion US Treasury auction knocked the stuffing out of precious metals on Wednesday, sending silver down 4.0% to $64.93 an ounce on the futures market. The scale of the drop stands in sharp contrast to the bullish physical signals that had lifted the metal only a day earlier, when it settled at $67.61 an ounce for a gain of 1.6%.

The trigger came from the bond market. Yields on ten-year US Treasuries climbed as high as 5.13% during the session — a level last seen in 2007 — after the sale of five-year notes drew tepid demand, according to Bloomberg, delivering one of the weakest auction results in years. Rising yields raise the opportunity cost of holding non-yielding assets, while also underpinning the dollar, which makes commodities more expensive for buyers outside the US and weighs on investor sentiment.

Fed Rhetoric Adds to the Pressure

Comments from within the Federal Reserve compounded the selling. Governor Michael Barr indicated that further adjustments to monetary policy are likely to be necessary. The central bank raised its benchmark rate just over a week ago, and silver has since shed 1.2%. Futures markets are now pricing a growing probability of another hike before year-end.

The retreat marks a reversal from Tuesday's firm tone, when heavy physical demand at the COMEX underpinned prices. Delivery notices for the September contract totaled 6,168, covering 30.84 million ounces — a wave of claims that has visibly drained exchange warehouses.

Warehouses Empty at a Rapid Clip

Roughly 7 million ounces left registered depots in a single week through Monday, according to media reports, extending a months-long trend of shrinking inventories. A CME Group warehouse report put total stocks in approved vaults at 338.1 million ounces (10,515 tonnes) at the start of September. Of that, 238.7 million ounces sat in the "eligible" category, with 99.4 million ounces in the directly deliverable "registered" status.

Those drawdowns fit into a broader structural shortfall. The Silver Institute's World Silver Survey 2026, published on April 15, recorded a fifth consecutive annual deficit last year, and projected a sixth straight gap of 46.3 million ounces for 2026, alongside an expected 18% rise in physical investment demand.

India's Import Curbs and Solar Substitution Weigh on Demand

Not every demand signal points higher. India's government imposed additional licensing requirements on silver imports from mid-May, Reuters reported, causing inbound shipments to collapse to 46.8 tonnes in May from 534.3 tonnes a year earlier.

Industrial consumption is shifting too. Solar has been a key pillar of physical offtake in recent years, but Sam Wilkinson, a renewable energy specialist at S&P Global, expects global photovoltaic installations to decline this year. Manufacturers are also squeezing more out of less material: the silver content per module has been falling steadily for years, and newer technologies such as silver-coated copper powder allow producers to cut requirements by as much as half — a trend that is putting a clear brake on industrial demand growth.

Chart Support in Focus

The combination of tighter monetary policy, climbing bond yields and more cautious industrial expectations is now visible in the price chart. Following the latest losses, silver is trading only marginally above its 50-day moving average. A sustained break of that support could open the door to further declines and deeper price levels.

The metal remains far below its record peak. Silver hit an all-time high above $121 an ounce on January 29; after the subsequent correction, it sits 44% below its 52-week high, even as September's delivery surge has helped steady the market.