Silver Surges Toward $59 Amid Gold-Silver Ratio Breakout

Silver is on the move, pushing toward $59 as the gold-silver ratio dips below 70. This has some traders taking notice, but it's not just a reaction to expectations of a dovish Federal Reserve meeting.

According to CME FedWatch figures, markets were assigning roughly a 64% probability to the Fed holding rates steady and a 36% probability to a quarter point hike before the July meeting. This means the original assumption that the Fed would sound soft is too neat of an interpretation.

The gold-silver ratio has been climbing lately, but it's not just a sign of silver outperforming gold. It indicates pressure building on the market, and with gold still holding above $4,000, silver needs to prove it has legs beyond being a haven trade.

Silver is also being driven by industrial demand, including AI infrastructure. The most active silver contract for September delivery rose 3.6% to $59.108 last week, helping the metal stay strong despite concerns over supply.

However, the supply story is more complicated than it seems. The Silver Institute forecast a 2% drop in industrial fabrication demand next year, and solar photovoltaic silver demand is expected to fall by 19%. This could lead to a deficit of around 46.3 million ounces in 2026.

The market's response to the Fed decision will be crucial for silver prices. If Chairman Warsh sounds hawkish, it could send the dollar higher and put pressure on the metal. On the other hand, if he holds rates steady and keeps the statement balanced, silver may continue its upward trend.