Silver Rebounds as Fed Policy Shifts Market Expectations

Silver futures rebounded on Tuesday, climbing 1.3% to settle at $61.84 an ounce as New York Fed President John Williams tempered expectations of another interest rate hike in October.

Williams' comments reduced the market-implied probability of a rate increase from above 70% to roughly 50%, providing some relief for silver prices, which had been under pressure due to rising Treasury yields and a strengthening dollar.

The correction has been steep, with silver down 14% year-to-date and 50% below its 52-week high set in January. The metal's retreat is also affecting mining companies, such as Pan American Silver, Hecla Mining, and First Majestic Silver, which have seen their shares come under selling pressure.

Despite the short-term volatility, Goldman Sachs analysts believe that supply dynamics will eventually turn in favor of silver, with a projected recovery to $70 an ounce by the end of 2026. However, the physical market remains tight, with a structural deficit persisting, according to The Silver Institute's World Silver Survey 2026.