Silver Rally Accelerates on Fed Pivot and Tight Physical Market

The silver market is navigating a delicate moment, with prices experiencing a two-speed rally. After reaching a session high of $66.79 in mid-August, silver has paused to catch its breath, closing at $64.83 on Friday with a modest 0.3% daily gain. However, the 30-day picture tells a more compelling story: a 15% advance that has reshaped the trading landscape.

The rally is driven by a dramatic repositioning in rate expectations, with the Federal Reserve's pivot rewriting the playbook. A month ago, markets assigned a 75% probability to a Fed hike in September, but this figure has collapsed to between 35% and 64-70%, depending on the measure. The softer dollar, with the index hovering below the 100 threshold, adds another layer of support.

The physical market is also experiencing tightness, with China's solar industry importing a record 836 tonnes of silver in March, and first-quarter inflows reaching 1,626 tonnes. This industrial demand collides with a supply picture that has been structurally deficient for years, with the Silver Institute projecting a global supply deficit of 95 million ounces for 2025.