Silver Retreats as Washington's Rate Path Overshadows a Tightening Supply Story
Published on 10/29/2026 at 14:41 | Editorial boerse-global.de
Silver fell 3.1% on Wednesday, with the metal caught between a hawkish Federal Reserve and a physical market that is sending mixed signals. Higher US Treasury yields weighed on the precious metals complex, according to media reports, while China's spot silver market reported thin turnover and rising inventories — leaving the price without near-term support from physical demand.
Chinese Stockpiles Climb as Spot Trade Stalls
The Chinese spot market shows buyers and sellers at a standoff. Tracked inventories rose by 33 tonnes week-on-week to 3,867 tonnes. Silver settled the session at $52.34 an ounce.
Weak turnover combined with growing stockpiles argues against any immediate supply tightness in the tracked Chinese market. That does not automatically contradict an expected global supply deficit: regional inventory movements and the worldwide annual balance describe different things.
Tracked silver ETF holdings, meanwhile, moved the other way. They stood at 15,541.85 tonnes yesterday, 1.39% above the prior month. The inventory picture therefore offers no uniform demand signal — physical trade is soft, while ETF flows point in a different direction. A broad recovery in silver demand cannot yet be inferred from either.
Fed Stands Pat, but December Looms Large
The Fed left its benchmark rate unchanged yesterday, holding the corridor at 3.75% to 4.00%. Two members voted for a hike. Reuters reported that US yields remained elevated after the decision — an environment that weighs on non-yielding precious metals.
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Sucden Financial is looking past the widely anticipated pause and toward the December outlook, which the brokerage argues matters more than the standstill itself. For silver, the question is not the latest decision but how restrictive policy remains afterward. A firm Fed stance could keep pressure on the metal, in Sucden's reading — a macroeconomic assessment rather than fresh news on physical supply.
Media coverage has tied discord within the central bank and energy-driven inflation worries to expectations of a possible rate increase in December. A strong dollar and the unwinding of speculative long positions were also cited as drags.
Inflation Data Takes Center Stage
September figures on personal income and spending, including the PCE price index, are due today at 8:30 a.m. US Eastern time, according to the Bureau of Economic Analysis. AP reported ahead of the release an expected inflation rate of 3.6% year-on-year. The PCE index is the Fed's preferred inflation gauge, making the print a potential influence on the rate path. The 3.6% figure is a forecast, not a published result.
Longer-Term Supply Picture Points the Other Way
Against the near-term rate pressure stands a tighter global supply balance. Sucden Financial pointed yesterday to the World Silver Survey 2026 forecast: mine production is expected to fall 0.3% in 2026 to 844 million ounces. An expected annual deficit, however, does not mean the price must rise in the short run — the recent action highlights the gap between long-run supply prospects and the rate and positioning worries currently in force.
UBS Global Wealth Management takes a decidedly more upbeat view over a longer horizon. The bank reiterated on Sunday its call for silver to reach $80 an ounce by September 2027, according to media reports, and expects 2026 to mark the sixth consecutive global supply deficit. UBS strategist Giovanni Staunovo has cited AI infrastructure and data centers as potential sources of demand.
That forecast does not necessarily conflict with short-term rate pressure — it simply sets a different time frame. The optimistic case carries clear risks: prolonged rate hikes, a deeper economic slowdown and faster substitution in industrial applications could all undercut the expected recovery.
For investors, the key tension therefore lies between hoped-for additional demand and the currently burdensome rate environment. Today's US inflation and economic data are the next signposts.
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