Key facts
- The Federal Reserve increased its benchmark interest rate by 25 basis points to a range of 3.75%-4.00%.
- This marks the Fed's first rate hike since 2023.
- Silver prices initially fell after the rate hike but rebounded, jumping approximately 4.6% on Thursday.
- A weaker U.S. dollar and retreating Treasury yields supported silver's recovery.
- The Silver Institute expects the global market to record its sixth consecutive annual supply deficit in 2026.
- Attention is now turning to the $70 price level for silver.
Silver prices experienced a notable rebound, surging approximately 4.6% on Thursday, despite the Federal Reserve implementing its first interest rate hike since 2023. The benchmark rate was increased by 25 basis points to a range of 3.75%-4.00% on Wednesday.
Initially, silver came under pressure following the Fed's announcement, with spot prices dropping to $62.68 per ounce. However, this weakness was short-lived, as the metal recovered and traded near $63.75 on Friday, according to Gate News. The rebound was supported by a weakening U.S. dollar and retreating longer-term Treasury yields, which occurred as oil prices eased. A softer dollar makes silver cheaper for international buyers, while falling bond yields reduce the opportunity cost of holding non-yielding assets like silver.
The Silver Institute anticipates a sixth consecutive annual supply deficit in the global silver market by 2026, with physical investment demand expected to rise. Analysts are now watching to see if silver can challenge the $70 price level, a move that could be supported if yields and the dollar remain contained. However, a resurgence in Treasury yields could pressure the metal again, a risk that remains significant as the Fed has signaled borrowing costs may stay elevated.