Silver Prices Plummet After Hawkish Fed Comments, but Short-Term Pullback Seen

Silver prices plummeted by 4.2 percent on Friday to close at $67.09 per ounce on the Comex, marking a reversal of its blistering run through the $70 threshold in August.

The trigger for this decline was not directly related to the metal itself but rather from Fed Chair Kevin Warsh's keynote address at Jackson Hole, where he pushed back against the notion that inflation will fade on its own and hinted at a possible rate hike if price pressures persist.

This hawkish tilt by the Fed sent shockwaves through the precious metals complex, with gold also taking a hit. Higher interest rates make non-yielding assets like silver less appealing, while a firmer dollar increases their cost for overseas buyers.

Despite this short-term pullback, the market remains bullish on silver due to its structural scarcity and supply deficit in the physical market, which operates independently of short-term fluctuations.