Silver Struggles at $70 as Fed Policy and Supply Deficit Clash

Silver prices are struggling to break above $70 per ounce as investors weigh the impact of persistent inflation, Federal Reserve policy expectations, and a tight supply picture. After failing to sustain momentum from its latest rebound, silver is approaching a technical zone that could determine whether it extends its recovery or corrects lower.

The near-term price analysis for silver remains closely tied to interest rates, with stronger US inflation data increasing expectations for another Fed rate hike before year-end. Traders are awaiting Federal Reserve Chair Kevin Warsh's Jackson Hole speech for additional guidance on monetary policy. Despite the tight supply picture, a fifth consecutive annual silver supply deficit and continued trend-following demand provide fundamental support beneath the market.

Recent inflation figures have strengthened expectations for another rate increase before the end of 2026, with markets seeing a 74% chance of a December hike and a 65% probability of rates remaining unchanged at the September meeting. This combination creates a near-term headwind for precious metals like silver, which does not generate income and is potentially less favorable in an environment of higher interest rates and elevated bond yields.