Silver Price Slides Amid Hawkish US Factory Sector Data

The US factory sector has reported a surprisingly robust reading, causing a hawkish shockwave in the silver market. The Institute for Supply Management's purchasing managers' index jumped to 55.6 in July, well ahead of the consensus forecast and giving the Federal Reserve room to keep borrowing costs elevated.

As a result, the opportunity cost of holding silver has increased, making it less appealing. The spot price slid further from its recent range, with Monday's pullback leaving it between $57.13 and $57.20 an ounce.

The Federal Open Market Committee voted 9 to 3 to hold the benchmark rate steady at 3.50 to 3.75 percent, with three members pushing for a quarter-point hike. This hawkish dissent is reverberating through the market, with traders assigning a 65 percent probability to another rate increase at the September gathering.

Beneath the macro noise, physical tightness continues to be a concern in the silver market. COMEX inventories have stabilized, but the longer-term trajectory remains sobering, with registered stocks sitting above 64.1 percent of all daily readings since 2020.