Silver Supply Constraints Weaken Amid Easing Rate Hike Odds

US inflation cooled to 3.4% in July 2026, lowering annual consumer price growth from 3.5% in June. The Consumer Price Index (CPI) rose 0.1% month over month, and the Producer Price Index (PPI) was unchanged at 0%, below the 0.2% consensus forecast.

The lower inflation reading reduced CME FedWatch odds of a September rate hike to roughly 40% from nearly 50% a week earlier, easing a key headwind for non-yielding silver. The Federal Open Market Committee (FOMC) has kept the federal funds rate at 3.50% to 3.75% for five consecutive meetings.

However, three of twelve voting members supported a 25-basis-point increase, leaving further tightening under consideration and preserving some rate pressure on silver. The Silver Institute's World Silver Survey 2026 forecasts a sixth consecutive annual deficit of 46.3 million ounces, while mine production remains below demand.