Silver Falls 6.5% to $49 an Ounce as Market Pressures Mount
Key Facts
Spot silver fell 6.5% to $49 an ounce on October 30, breaking below $50 for the first time in 11 months, according to a Reuters report published by MarketScreener. The decline came as part of a broader selloff in metals, with market pressures coinciding with U.S. inflation data above the August reading. Personal consumption expenditures inflation, the measure monitored by the Federal Reserve, rose to 3.6% year over year in September from 3.4% in the previous month. Core inflation also rose to 3.1% from 3.0%. The data strengthened bets that interest rates would remain high, adding pressure on precious metals that do not yield income.
Reuters linked the decline in metals to a fall in technology shares amid concerns that heavy spending on artificial intelligence may not generate sufficient returns. Commerzbank analysts said the sharp drop in sector shares may have prompted investors to sell safe-haven assets to meet liquidity requirements and triggered margin calls. In a separate report, Reuters said rising energy prices and concerns about persistent inflation strengthened expectations that U.S. interest rates would remain high. Oil prices were on track for gains for the fourth consecutive month in October, according to the report. Peter Grant, chief metals strategist at Zaner Metals, said, "The higher-for-longer interest rate approach is prevailing, and that is weighing on precious metals."
Interest rate pressures came as the U.S. economy recorded annualized growth of 3.4% in the third quarter, compared with 2.2% in the second quarter, according to the Bureau of Economic Analysis' advance estimate. The bureau attributed the increase to growth in investment, consumer spending and government spending, partly offset by a decline in exports. On October 28, the Federal Reserve kept its target interest rate range at 3.75% to 4%. The committee approved the decision by a 10-to-2 vote; the two dissenting members preferred to raise the target range by a quarter of a percentage point. The board said economic activity was expanding at a solid pace and inflation remained elevated, and that more information would help the committee determine the appropriate policy stance.
In metals markets, silver, platinum and palladium fell between 7% and 9% in the week ended October 30, and the relative strength index for the metals entered oversold territory for the first time in three years, according to Reuters. In a separate market report, spot silver was down 5.8% at $49.34 an ounce, its lowest level since November 2025. Commerzbank analysts said forced selling and margin calls may have contributed to the decline, but described the metals' pullback as excessive and maintained their forecast for a recovery in prices. Physical gold demand also remained weak in major Asian markets during the week, as Indian buyers postponed purchases and Chinese buyers stayed on the sidelines. These signals add to the picture of pressure on metals, with demand drivers differing between gold and silver.
Silver is also facing weakness in some consumer and industrial uses, with HSBC saying industrial and jewelry demand are declining. The institution expects an average of $64 an ounce in 2027, down from its average forecast of $71 for 2026. These estimates place industrial and jewelry demand alongside the interest rate path among the factors affecting the metal. On monetary policy expectations, the Associated Press reported that most economists expect another quarter-point increase at the Fed's December 8 and 9 meeting. Markets had priced in a probability of about 85% for an increase after the October 28 decision. Fed Chair Kevin Warsh said energy prices and related commodities had risen again in recent weeks.
Markets are awaiting the October personal income and spending report, due on November 25 at 8:30 a.m. Eastern time, according to the Bureau of Economic Analysis schedule. The next release follows the September reading, which showed headline and core inflation rising from the previous month. At its latest meeting, the Fed characterized inflation as still elevated and said more information would help it determine its policy stance. The committee's next meeting, scheduled for December 8 and 9, is drawing investor attention amid expectations of the additional increase reported by the Associated Press. In these accounts, silver's moves remain tied to developments in inflation and interest rate expectations, alongside the selloff in technology shares and the weak demand cited by HSBC.