Silver Price Retreats as Hawkish Fed Policy Path Takes Center Stage
Silver prices have retreated from their post-Fed meeting highs as investors weigh the implications of a potentially hawkish Federal Reserve policy path. The central bank's decision to leave interest rates unchanged, but with three members dissenting in favor of a quarter-point increase, has kept pressure on non-yielding assets like silver.
The market is smaller and more volatile than gold, making it particularly sensitive to a stronger US dollar. A 20% jump in physical investment is supporting the metal, but industrial demand is weakening, with solar installations driving down silver usage.
The Silver Institute forecasts a sixth consecutive annual deficit in 2026, with demand exceeding supply by about 67 million ounces. However, this trend may not necessarily translate to higher prices, as escalating Middle East tensions could reinforce inflation and lift bond yields.