Spot silver prices advanced on Thursday, approaching the $59 per ounce mark, as a weakening U.S. dollar provided support for precious metals following Wednesday's decline. According to Kitco's live pricing, spot silver reached $58.82 a troy ounce, a gain of $0.68, with the session fluctuating between $57.47 and $59.60.
The upward move comes amid a complex environment for the white metal. While investors are seeking safer assets due to heightened geopolitical tensions in the Middle East, the Federal Reserve's potential to maintain or even increase interest rates continues to weigh on non-yielding assets like silver and gold, which do not offer interest income.
Silver moved in tandem with other precious metals. Spot gold added 0.8% to $4,106.82 an ounce by 0901 GMT. Silver was up 1.4% at $59.14. Platinum gained 2.5%, while palladium rose 2.8%, according to Reuters. "Gold is trying to form a bottom today as dollar strength eases," noted Nikos Tzabouras, senior market analyst at Jefferies-owned Tradu.com.
The dollar's retreat made dollar-priced metals more affordable for buyers holding other currencies, pushing silver higher after a sharp drop on Wednesday. Comex silver futures closed down 4.54% at $58.164 on Wednesday, its lowest since June 24, based on Dow Jones market data reported by The Wall Street Journal.
However, Federal Reserve policy is tempering the rebound. Minutes from the central bank's June meeting, released Wednesday, revealed increased concern about inflation. The Fed kept its benchmark interest rate steady at 3.50% to 3.75% last month, but some officials advocated for a rate hike before the bank decided to pause, according to Reuters.
Traders remain cautious. "The door is very much wide open to a September interest rate hike," Thomas Ryan of Capital Economics told The Wall Street Journal, which noted that the Fed minutes reflected a more hawkish tone from the committee.
In India, the world's largest silver market, physical supply is tight due to import restrictions, leading to shortages and pushing local premiums to their highest in six months. Premiums hit $6.50 an ounce this weekâmore than 10% above official prices. "Silver imports have nearly come to a halt," said Chirag Thakkar, chief executive of Amrapali Group Gujarat, as reported by Reuters.
While this tightness supports the local Indian market, it does not necessarily drive up prices globally. Reuters noted that weaker Indian imports could pull global prices lower, despite tight domestic supply pushing up local premiums. Exchange-traded funds (ETFs) tracking market prices have sent some metal into India as traders took profits, but dealers report that metal is now exhausted.
Silver retains some support from supply tightness, unlike several other industrial metals. The Silver Institute and Metals Focus said in April that the market is on track for a sixth consecutive year of deficits. Demand is set to outstrip supply, with 762 million troy ounces drawn from inventories since 2021. "Lease rates in London have largely normalised, but risks of another liquidity squeeze this year remain," said Philip Newman, managing director at Metals Focus, according to Reuters.
Nevertheless, significant risks persist. A stronger dollar, higher U.S. inflation figures, or rising expectations for a September Fed rate hike could all erode silver's gains. If India maintains its import restrictions and reduces purchases for an extended period, the global market could lose a major source of demand, even as local shortages persist.
Traders are now awaiting U.S. inflation data next week and Fed Chair Kevin Warsh's testimony before Congress to set the tone for markets. Silver is seeing renewed buying interest, but it remains short of a clear breakout above recent highs.
