Silver prices are again under pressure as the white metal has tumbled nearly 6% from last week, when it touched a two-month high near the $71/oz mark. Currently trading near the $67/oz mark, silver prices retreated sharply from their previous session, driven by the US Federal Reserve chair Kevin Warsh’s rather hawkish tone and a lift in crude oil prices.
Although the precious metal advanced around 16% in August, Warsh’s recent address at the Jackson Hole Economic Symposium has increased the probability of a rate hike at the Fed’s September meeting, as the policymaker said that the central bank will “have work to do” if inflation is not controlled towards its target of 2%.
Additionally, renewed military action between the US and Iran near the Strait of Hormuz has further dampened the momentum for white metal as elevated crude oil prices have again mounted inflationary concerns. With so many developments at play, markets are increasingly questioning where silver prices are headed next.
Silver: Structurally bullish, tactically volatile
According to Kaynat Chainwala, Assistant Vice President of Commodity Research at Kotak Securities, the structural outlook for silver remains bullish, but over the shorter course of time it remains vulnerable to the Fed’s policy stance.
The analyst adds that if the Fed delivers a hawkish tone, it will impact non-yielding assets first and surely affect the investment and ETF demand caused by rising yield expectations, so a pullback towards the $55-$57/oz is possible.
However, she adds that this wouldn’t affect silver’s structural story, which remains supported by supply deficits and industrial demand. “The structural backdrop of persistent supply deficits, expanding solar-related consumption and rising demand from electrification and data-centre infrastructure continues to favour silver over the medium term,” she added.
Echoing a similar tone, Jigar Trivedi, Senior Research Analyst at IndusInd Securities, noted that near-term price volatility is possible, and the white metal is expected to contract further, caused by the high possibility of a rate hike at the upcoming FOMC meeting.
So why did silver rally in August?
Silver prices climbed in August as the possibility of a rate hike stayed low for most part of the month and only rose sharply in the final days. “This month, the rate hike possibility fell sharply as crude oil also witnessed a correction with the de-escalation of the US-Iran geopolitical uncertainty,” added Trivedi
These developments also dragged the dollar index, which declined 0.50% on-month. A soft greenback makes precious assets like gold and silver less expensive for overseas currency holders, thereby aiding demand.
Additionally, Chainwala explained that an expanded US Treasury bond-buyback programme coupled with strong ETF inflows and concerns over US fiscal credibility drove silver’s price action this month.
Silver: What’s the outlook for 2026?
Chainwala said that the broader outlook for the remaining part of the year remains constructive but noted that a price rally of silver is “unlikely to be linear”.
“However, after a sharp rally, the metal is vulnerable to periodic profit-taking, particularly if US yields and the dollar remain firm,” she added.
While Trivedi flags that if rates are hiked in September, markets will further speculate a hike in December, which may put price pressure on the precious metal.
“Silver dropped by a total of 43% in the previous four months as rising oil prices made a strong case for a couple of rate hikes by the US Fed to fight against rising inflation,” he added.
Silver: Next levels to watch out for
According to Chainwala, in international markets, the immediate support for spot silver sits at $65.5/oz, with deeper cushions at $63 and $61. While Trivedi noted the near-term support level at $60/oz,
The Kotak analyst added that the white metal’s immediate resistance level is seen at $68 and $70, and Trivedi notes the same at $75/oz.
“On the domestic front, MCX support is layered at Rs 2,32,500, Rs 2,28,000 and Rs 2,23,000, with resistance seen at Rs 2,48,000,” added Chainwala, and Triviedi noted MCX support at Rs 2,30,000/kg, with resistance at Rs 2,50,00/kg.
Conclusion
Over the past six months, silver prices have tumbled nearly 28%; the white metal has fallen around 45% from its January peak of $121/oz and is currently trading near the $66/oz mark. The Fed’s rate action and key US economic data, including employment reports and non-farm payrolls due later this week, will provide further cues for silver prices.