Silver at $63.72 Amid 85% Fed Hike Odds
Silver trades near $63.72, down 47.6% from its January peak, as market pricing for a Federal Reserve rate hike approaches certainty.
Silver trades at $63.72 per ounce. This price is 47.6% below the record of $121.62 set on January 29, 2026. The market has largely priced in the next monetary policy move. CME Group data indicates an 85% to 91% probability of a quarter-point rate hike. This probability rose from 66% two weeks ago. The decision is expected on September 16.
Speculative positioning has shifted despite falling prices. Net long positions now represent 25.2% of open interest. This level sits at the 73rd percentile for the past 60 weeks. It is up from the 20th percentile in mid-August. The Silver Institute forecasts a sixth consecutive annual supply deficit. The shortfall is estimated at 46.3 million ounces. This widens the cumulative deficit to 762.1 million ounces since 2021.
Inflation Data Drives Rate Expectations
August Consumer Price Index data held at 3.4% annually. Core inflation cooled to 2.4%. This is the lowest core rate since March 2021. Producer prices rose 5.4% year over year. A supply shock in the Middle East pushed crude oil above $100 per barrel. This external factor increased inflation risks independent of domestic demand. The Federal Reserve faces a constraint where rate cuts are not a viable solution.
Real Yields Pressure Silver Prices
The 10-year Treasury yield reached 4.97%. This is the highest level since October 2023. The 10-year TIPS yield stands at 2.55%. This figure is up roughly 20 basis points from mid-August. Real yields determine the opportunity cost of holding non-yielding assets. Silver faces greater pressure than gold due to lower monetary demand. The 20-basis-point increase in real yields directly suppresses silver’s price relative to gold.
Fed Leadership Changes Policy Dynamics
Chair Kevin Warsh is presiding over his first rate hike since taking office in May. He has not submitted a personal projection to the dot plot. He is the first chair to withhold this data since 2012. Market futures price the federal funds rate at 4.1% by December. The rate is projected to reach 4.6% by September 2027. The dot plot from the other 18 participants will determine the long-term path. A confirmation of this trajectory will sustain the current yield environment. A deviation will force a rapid repricing of expectations.
