Silver Holds Near $57 as Markets Await Fed Decision

Silver prices fell to around $56.5 per ounce on Tuesday, extending recent losses as elevated oil prices heightened inflation concerns and reinforced expectations of tighter monetary policy. The metal also faced pressure from a stronger US dollar and rising bond yields. Oil prices remained firm amid ongoing hostilities in the Middle East and Eastern Europe, while Iran continued to assert its control over the Strait of Hormuz. Meanwhile, the US Federal Reserve is widely expected to keep interest rates unchanged next week, with markets pricing in roughly a 94% probability of a rate hike in December. Elsewhere, the European Central Bank is expected to implement at least one additional 25-basis-point rate increase this year to address persistent inflationary pressures. Bank of Japan Governor Kazuo Ueda also noted that underlying inflation was “quite close” to the central bank’s 2% target, signaling the possibility of further monetary tightening.

Silver prices hovered around $57 an ounce on Monday as investors weighed easing oil prices and looked ahead to next week’s Federal Reserve meeting. Oil prices pulled back from a five-month high after US President Donald Trump eased sanctions and tariffs on Russia, raising expectations of increased fuel supplies and easing concerns over inflation. Recent US CPI and PPI reports showed stronger-than-expected inflation, partly driven by rising gasoline costs. Investors are now focused on the Fed’s upcoming policy decision and the US PCE price index, the central bank’s preferred measure of inflation. According to CME’s FedWatch Tool, markets see a 15% chance of a rate hike this month, with the probability of an increase in December reaching 89%. Meanwhile, the European Central Bank is expected to deliver at least one additional 25-basis-point rate hike this year to address persistent inflationary pressures.

Silver climbed toward $54.5 an ounce on Monday, extending its recent gains as dovish remarks from Federal Reserve Chair Kevin Warsh prompted traders to scale back expectations of an October rate hike. Speaking at the IMF’s annual meetings in Bangkok on Friday, Warsh avoided signalling the outcome of this month’s FOMC meeting but noted that hotter-than-expected inflation had not changed his assessment of the US economy. The Fed has since entered its blackout period ahead of the October 27–28 policy meeting, with markets pricing in an approximately 84% probability of rates remaining unchanged. Precious metals also benefited from safe-haven demand as growing concerns over AI-related investments triggered an equity selloff and pushed bond yields lower. Meanwhile, escalating geopolitical tensions in the Middle East and Eastern Europe kept oil prices elevated, while violent protests in France and other European countries added to broader market uncertainty.