Silver Drops on Strong Dollar and Fed Rate Expectations

Silver prices fell around 3% to approximately $50 an ounce on Thursday, retreating to levels not seen in months as a stronger US dollar, rising oil prices and growing expectations of further Federal Reserve tightening weighed on the metal. Stronger-than-expected US consumer inflation data for October, released on Tuesday, pushed the dollar to a 19-month high and reinforced bets on further Fed rate hikes. Meanwhile, renewed gains in oil prices added to inflationary pressures after President Donald Trump said the US did not need a deal with Iran and redirected Vice President JD Vance towards domestic priorities rather than negotiations with Tehran. According to CME’s FedWatch Tool, markets are pricing in nearly a 90% probability of a 25-basis-point rate hike in December, while the likelihood of a larger 50-basis-point increase has climbed to around 10%, up from zero before the inflation data.

Silver fell toward $51 an ounce on Thursday, extending recent losses as a stronger US dollar weighed on the precious metal. The dollar gained support from hotter-than-expected US inflation figures and increasingly hawkish comments from Federal Reserve officials, reinforcing expectations of further interest rate increases. Fed Governor Christopher Waller indicated that a 50-basis-point hike in December may be necessary, while Dallas Fed President Lorie Logan supported at least two additional 25-basis-point increases to address persistent inflationary pressures. Markets are currently pricing in approximately a 91% probability of a rate hike next month, with further increases in January and potentially April also being factored in. Investors are now turning their attention to upcoming US economic releases, including weekly jobless claims, existing home sales and producer inflation data, for further indications of the Fed’s monetary policy outlook.

Silver pared its early gains to trade just above $52 an ounce on Wednesday, as the USD climbed to its highest level since April 2025, supported by stronger-than-expected inflation data and hawkish Federal Reserve commentary. A modest recovery in oil prices following their recent decline to 10-week lows also added to inflationary pressures. US consumer prices rose 0.4% in October, exceeding expectations of 0.3%, prompting markets to fully price in a December Fed rate hike, with the probability rising to 100% from 84% before the release, according to the CME FedWatch Tool. Expectations of a larger, 50-basis-point increase also gained momentum. Meanwhile, Fed Governor Christopher Waller suggested that persistent core inflation could justify a half-point hike as early as December, while other policymakers, including Anna Paulson and Michelle Bowman, maintained a hawkish stance, reinforcing expectations of tighter monetary policy and strengthening the US dollar, weighing on precious metals.