Silver Drops to Two-Month Low Ahead of Fed Minutes

Silver prices fell more than 3% to around $59 an ounce on Wednesday, touching their lowest level since early August, pressured by a stronger US dollar as investors awaited the minutes of the Federal Reserve’s September meeting for clues on policymakers’ appetite for further rate hikes. Following softer US jobs data, markets now largely expect the Fed to leave rates unchanged in October, while still pricing in an over 80% probability of a hike in December, according to the CME FedWatch Tool. Kansas City Fed President Jeff Schmid said interest rates may still need to rise to bring inflation under control, while San Francisco Fed President Mary Daly said the policy decision would depend on whether inflationary pressures prove temporary or persistent.

Silver dropped below $61 an ounce on Wednesday, reversing gains from the previous session as oil prices rebounded on persistent risks to Middle East supply, keeping inflationary risks and rate hike concerns in focus. Oil prices advanced as Iran intensified attacks on tankers in the Strait of Hormuz in recent days, while Saudi forces continued to clash with the Houthis. Treasury yields also remained near multi-decade highs amid concerns over persistent inflation, rising fiscal risks and elevated AI-related debt issuances. Meanwhile, markets are pricing in nearly an 80% chance that the US Federal Reserve will keep rates unchanged this month following weaker-than-expected job growth in September and downward revisions to payrolls for the prior two months. Investors now await minutes from the Fed’s latest meeting for further clues on the monetary policy outlook.

Silver hovered around $61 an ounce on Tuesday as fading expectations of a Federal Reserve rate hike this month offset pressure from a firm US dollar and elevated Treasury yields. Markets have scaled back expectations for an October rate increase following weaker-than-expected job growth in September and downward revisions to payrolls for the previous two months. Traders now see only about a 20% chance of a rate hike this month, while pricing in nearly a 70% probability of an increase in December, according to the CME FedWatch Tool. Meanwhile, the dollar remained close to an 18-month high, supported by rising government debt, widening budget deficits and political uncertainty across parts of the Eurozone, which have weighed on the euro. Elsewhere, oil prices fell on Tuesday as resilient Middle Eastern crude exports and a G7 emergency stockpile release eased concerns over potential supply disruptions.