Silver prices are fluctuating within a narrow range of around $59.7–$62 per ounce.
Recent rebounds have not been strong enough to push prices out of this range, indicating that investors remain cautious amid the divergence between a weakening U.S. labor market and persistent inflationary pressures.
The recently released U.S. September employment report showed just 29,000 new jobs, while the unemployment rate rose from 4.1% to 4.2%. These results reinforced expectations that the Fed would pause rate hikes in October. However, markets are still pricing in a roughly 20.5% probability of a rate hike in October and an 84.5% probability in December.
In my view, expectations that the Fed will delay further tightening are supporting silver in the short term, but the prospect of further rate increases later this year continues to limit buying interest.
From another perspective, rising input price pressures in the services sector make it difficult for markets to rule out further Fed rate hikes later this year. The September ISM report showed that the U.S. Services PMI declined from 55.4 to 54.9, indicating that activity continued to expand, although at a slower pace.
Meanwhile, the input prices index rose from 72.6 to 74.0, its highest level since July 2022. This suggests that inflation risks remain, even as job growth has slowed. If expectations of further Fed tightening persist, Treasury yields may struggle to sustain a decline, thereby limiting silver’s appeal and keeping its rebounds under pressure.
In a report released in April this year, the Silver Institute forecast a silver market deficit of 46.3 million ounces in 2026.
However, industrial demand is projected to decline by 3%, mainly as the solar industry reduces silver usage and accelerates material substitution. Meanwhile, demand for silver coins and bars is forecast to rise by 18%, partially offsetting declines in other consumption categories. The supply deficit remains a supportive factor over the long term, but investment demand will play an important role in the prospects for a price recovery.
In the short term, in my view, silver may continue to trade sideways as the market awaits further signals on interest rates. The Fed meeting minutes, scheduled for release on October 8, are the next event to watch. If the message continues to emphasize inflation risks and the possibility of rate hikes, rebounds may remain limited. Conversely, greater caution toward further tightening, alongside a decline in the U.S. dollar and Treasury yields, would create conditions for silver to break out of its current range.
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