Silver Prices Soar Amid Hawkish Fed, But $60 Target Remains Elusive

The Federal Reserve's decision to keep interest rates unchanged has sent silver prices soaring, but a hawkish Fed may still derail its charge towards $60. The central bank's 9-3 vote showed that pressure for tighter policy is building inside the Fed, even as officials chose not to act immediately.

Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan all preferred a quarter-point increase, while Chair Kevin Warsh reiterated the central bank's commitment to restoring inflation to its 2% target. This leaves silver in an awkward position, with a stronger dollar weighing heavily on its price.

The market is smaller and generally more volatile than gold, making it sensitive to both borrowing costs and industrial demand. Silver's industrial role is becoming a bigger part of the price debate, as the Silver Institute expects global industrial fabrication to decline 2% this year to about 650 million ounces, a four-year low.

The weakness is expected to be concentrated in the solar industry, where manufacturers are reducing the amount of silver used in each panel and substituting other materials where possible. This trend weakens one of the strongest arguments behind silver's earlier rally, but physical investment is forecast to jump 20% to a three-year high of 227 million ounces.

The supply picture remains supportive despite softer fabrication, with the Silver Institute expecting the market to record a sixth consecutive annual deficit in 2026. Middle East tensions add another source of volatility, as President Donald Trump pledged a forceful response after Iran targeted a US military base in Jordan.