Silver Bounces Back Despite Fed Rate Hike

The Federal Reserve raised its benchmark rate by 25 basis points to 3.75%-4.00% in its first increase since 2023, but this didn't break silver's price. Initially, silver came under pressure, but the weakness quickly reversed, with the metal jumping roughly 4.6% on Thursday.

The reaction is notable because silver had already been battling growing Fed rate-hike risk earlier this month. The U.S. dollar weakened, and longer-term Treasury yields retreated as oil prices eased, providing relief to silver.

A weaker dollar makes the metal cheaper for international buyers, while falling bond yields reduce the opportunity cost of holding non-yielding assets. Silver has long-term support from tight supply, with the Silver Institute expecting a sixth consecutive annual supply deficit in 2026 and increasing physical investment demand.