A hotter-than-expected US inflation reading has knocked silver off balance, with the metal ending Friday at $57.13 an ounce — a modest 0.8% daily decline that caps a 9.9% slide over the past 30 days.
The trigger came midweek, when US authorities reported a 3.7% year-on-year rise in the September consumer price index. Economists had pencilled in 3.6%. The surprise set off immediate selling across commodity markets as traders priced in a prolonged restrictive stance from the Federal Reserve. At one point, silver tumbled below the $58 mark.
Yields and the Dollar Do the Damage
Currency and bond markets did much of the heavy lifting. A firmer US dollar made the metal more expensive for buyers outside the dollar bloc, while rising yields on interest-bearing assets dulled the appeal of non-yielding commodities such as silver.
By Thursday, though, the tide had turned. Helped by retreating yields, the COMEX front-month contract recovered to settle at $57.60 an ounce, a gain of 3.2% on the day. Even so, the price sits roughly 53% below its 52-week high of $121.78, set at the end of January.
Asian Buyers Keep Their Distance
Physical trading in Asia is offering little support. According to the Shanghai Metals Market, silver bars in Hong Kong changed hands this week at discounts of up to $0.15 an ounce to the London Bullion Market Association reference price. Processing exports reflected the same softness, while ordinary commercial imports traded close to parity.
That weaker willingness to pay at Asian trading hubs suggests fabricators are comfortably stocked for now. For market participants, the discount is a clear signal that Far Eastern bar demand is unlikely to provide much of a price floor in the near term.
London Vaults Swell, COMEX Stocks Edge Higher
On the supply side, stored metal is accumulating. The LBMA reported that silver holdings in its London vaults rose 1.95% to 28,985 tonnes at the end of September. The build underscores comfortable availability in Europe’s trading hub — and as long as inventories grow, the market lacks a key catalyst for speculative squeeze fears.
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Across the Atlantic, COMEX-registered silver stocks also ticked up, rising 1.2 million ounces to 333.2 million ounces in the middle of the week. Of that total, 103.1 million ounces sat in the immediately deliverable category, with 230.1 million ounces in other eligible stocks.
Mine Output Tells a Mixed Story
Production reports from mid-tier miners painted a patchy picture for the September quarter. Endeavour Silver logged output of 2,096,545 ounces, held back by operational interruptions: work at the Terronera site was suspended for nearly two weeks in August, while mill repairs at the Guanaceví mine curbed throughput.
Guanajuato Silver, meanwhile, reported consolidated third-quarter output of 392,138 ounces of silver. Total production reached 683,675 silver-equivalent ounces, up 13.7% from the prior quarter — an increase the company attributed to higher throughput at several operations, even as work at its Valenciana complex paused.
All Eyes on October 27–28
Macro conditions in the US remain the dominant force. Fed Chair Kevin Warsh declined to pre-commit to policy decisions ahead of the central bank’s upcoming deliberations in October and December. The dollar’s slight pullback from its recent interim peak nonetheless eased selling pressure on precious metals for a time.
The next meeting of the Federal Open Market Committee, scheduled for October 27 and 28, is now the focal point. Whether silver extends its recent consolidation or breaks fresh ground will hinge largely on the rate decision that emerges from it — with economic data and yield moves setting the tone in the meantime.
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