Silver Slips as Fed Tightening Bets Weigh on Metals

Silver fell below $64 an ounce on Thursday, pressured by growing expectations that the US Federal Reserve could tighten monetary policy further. Rising inflation pressures and signs of a resilient economy are reinforcing bets on another rate hike, with traders increasing positions for a second consecutive tightening in late October. The pressure on precious metals intensified as the US dollar climbed to a two-month high, following data showing US business activity expanded in September at its fastest pace in more than five years. Meanwhile, weekly jobless claims fell to a near 60-year low, underscoring the strength of the labor market and supporting expectations for tighter policy. Elsewhere, oil prices continued to rise as US-Iran diplomatic talks showed no concrete signs of progress, raising concerns over potential supply disruptions.

Silver fell toward $64 an ounce on Thursday, extending losses from the previous session, pressured by a stronger dollar and surging Treasury yields. Those moves came as stronger-than-expected US private-sector data heightened inflation concerns and strengthened expectations for further Federal Reserve rate hikes. Several Fed officials have also reiterated support for last week’s rate increase while warning about persistent inflation risks. Markets are now pricing in around a 70% chance of another Fed rate hike in October, up from 55% a day earlier. At the same time, oil prices rebounded as Iranian President Masoud Pezeshkian maintained a firm stance, saying Tehran would not allow freedom of navigation through the Strait of Hormuz while sanctions and a US blockade remain in place. Higher oil prices add to inflationary pressures, reinforcing expectations for a more hawkish interest-rate outlook.

Silver tumbled to $64.6 an ounce on Wednesday, pressured by a stronger dollar as stronger-than-expected PMI data and hawkish comments from Federal Reserve officials reinforced expectations for tighter monetary policy. The dollar climbed to fresh near two-month highs after US business activity accelerated for a fourth consecutive month in September, reaching its fastest pace in more than five years. Richmond Fed President Tom Barkin said higher interest rates, along with the prospect of further increases, could help temper inflation expectations without significantly weakening economic activity. The Fed raised rates by 25 basis points last week and signaled that another hike could come before year-end. Markets are pricing in a near 60% chance of an October increase, according to CME FedWatch. Meanwhile, geopolitical tensions remained in focus as President Trump threatened further action against Iran while also suggesting that a deal could be reached soon amid renewed diplomatic efforts.