Key Highlights

  • Silver fell more than 3 percent to around USD 59.73 an ounce, its lowest level since early August.
  • Prices are down 9.17 percent on the month but remain up 22.24 percent on a yearly basis.
  • Markets now largely expect the Fed to leave rates unchanged in October, while pricing in over an 80 percent probability of a December hike.
  • Kansas City Fed President Jeff Schmid said rates may still need to rise to bring Inflation under control.

Silver prices fell more than 3 percent to around USD 59 an ounce on Wednesday, touching their lowest level since early August, as a stronger US dollar pressured the metal while investors awaited minutes from the Federal Reserve's September meeting for clues on policymakers' appetite for further rate hikes. The decline extended a sharp monthly drop of 9.17 percent, though silver remains up 22.24 percent over the past year, reflecting the broader strength precious metals have shown over a longer horizon even amid recent volatility.

Softer Jobs Data Shifts Near Term Rate Expectations

Following softer US jobs data, markets now largely expect the Federal Reserve to leave rates unchanged at its October meeting, while still pricing in an over 80 percent probability of a hike in December, according to the CME FedWatch tool. This shift in near term expectations has not been sufficient to offset broader dollar strength, which has weighed on silver and other precious metals priced in the US currency.

Kansas City Fed President Jeff Schmid said interest rates may still need to rise to bring inflation under control, while San Francisco Fed President Mary Daly said the policy decision would depend on whether inflationary pressures prove temporary or persistent. This divergence in tone among regional Fed officials suggests the path for rates beyond the immediate October meeting remains genuinely uncertain, a dynamic that could continue to drive Volatility in silver and broader precious metals pricing as new data arrives.

Industrial Demand Context Alongside Precious Metal Dynamics

Silver's dual role as both a precious and industrial metal means its price action often reflects a combination of safe haven positioning and broader industrial demand trends, distinguishing it somewhat from gold's more purely monetary dynamics. The metal's sharper monthly decline relative to gold may reflect this industrial demand sensitivity, particularly if broader economic growth expectations have moderated alongside the recent data flow.

Where Things Stand

Silver's retreat to a two month low reflects a combination of dollar strength and investor caution ahead of key Federal Reserve communications, even as the metal retains a substantial yearly gain. The next major catalysts are likely to be the Fed's rate decisions on October 28 and December 9, alongside incoming inflation and labor market data that will shape whether officials ultimately proceed with the additional hike many currently anticipate.