Shifting Fed Expectations

Silver prices are stabilising today following continued declines this week. The market has been knocked heavily lower this month amidst rising Fed tightening expectations. Hawkish comments and dot plot forecasts at the latest FOMC meeting, followed by hawkish Fed speak since then, have seen USD rising firmly higher as traders moved to increasingly forecast an October rate hike. However, rate hike pricing has slipped today on the back of soft US data yesterday. Traders are now awaiting the latest set of US data due this afternoon. If we see any further weakness this should see rate hike expectations dropping further, weighing on USD and allowing silver and the broader commodities space room to rebound. However, if today’s data come sin strong, rate hike expectations should rebound, sending silver lower as USD turns higher again.

Falling Oil Prices Helping Silver

Lower oil prices are also helping underpin silver today. Supply concerns linked to the ongoing conflict in the Middle East have weakened today following the latest data which points a solid rebound in output from the region. Crude exports (10-day average) are now back up to around 98% of their pre-war average. While no breakthrough in negotiations between the US and Iran has been seen yet, any positive headlines should help out recover further, sending rude lower. In this scenario, silver prices should rebound as global manufacturing expectations rise accordingly and USD continues lower.

Technical Views

Silver

The recovery move in silver has stalled for now with price turning lower again from 70.5985. The market is being underpinned for now by the bull trend line from 2025 lows and while this holds, focus is on a fresh push higher and a break above 70.5985. If we break below the trend line, however, 54.4015 is the next support level to watch.