Silver price hits new yearly low amid rising Fed hike expectations, PCE data caution

Silver falls 4.62% on Wednesday to $58.75, marking its lowest level of the year.
Markets are increasing bets on a Fed rate hike later this year, supporting the US Dollar.
Investors remain cautious ahead of the US PCE Price Index, a key gauge for monetary policy expectations.

Ghiles Guezout FXStreet

Silver (XAG/USD) extends its correction on Wednesday and trades around $58.75 at the time of writing, down 4.62% on the day after hitting a fresh low not seen since December 2025. The white metal remains under significant pressure as expectations of a more restrictive monetary policy stance in the United States (US) continue to underpin the US Dollar (USD).

The latest decline in Silver comes amid an aggressive repricing of interest rate expectations. The Federal Reserve (Fed) delivered a distinctly hawkish message at its latest meeting, fueling speculation that borrowing costs could rise further in the coming months. According to the CME FedWatch tool, investors are now assigning a high chance to a rate hike before the end of the year.

This backdrop continues to support the US Dollar, whose strength is weighing on dollar-denominated precious metals. A stronger Greenback makes Silver more expensive for international buyers, while higher interest rates reduce the appeal of non-yielding assets such as Silver.

US Treasury yields have also moved higher as investors adjust their expectations in response to persistent inflation risks. Concerns about elevated energy costs and the resilience of the US economy have contributed to scaling back hopes for a near-term easing cycle.

Market attention is now turning to the Personal Consumption Expenditures (PCE) Price Index due on Thursday. Stronger-than-expected inflation data could reinforce expectations of further monetary tightening and add to the downside pressure on Silver. Conversely, softer inflation figures may provide some relief for the precious metal and help stabilize prices following the recent sell-off.

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Which factors influence Silver prices?

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

How does industrial demand affect Silver prices?

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

How do Silver prices react to Gold’s moves?

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

Author

Ghiles Guezout

FXStreet

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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