Silver At Yearly Lows Ahead Of Today's FOMC Decision

Silver is struggling to find a floor heading into tonight's Federal Reserve decision, with prices pinned near their lowest levels of the year.

A hawkish Fed, elevated Treasury yields and a steady exit by speculators have dragged the metal more than halfway down from its January record. Markets expect the Fed to hold rates today, but the bigger question is how firmly Chair Kevin Warsh keeps the door open to another hike, and whether investors still believe him.

Latest Market Moves

●     Silver was trading just under $54 an ounce in early Wednesday trade, after closing below that level on Friday for the first time this year. It is down around 25% year-to-date and roughly 55% below its January 29 record of $121.62.

●     Gold slipped back towards $4,045 an ounce during Asian hours after a 1% gain on Tuesday, having dipped below $4,000 last week for the first time since July.

●     The gold/silver ratio pushed above 75 to a multi-month high, as silver continued to underperform gold.

●     The US 10-year Treasury yield edged back above 5% heading into Wednesday's session, while the US 2-year yield rose to around 4.74% on Tuesday.

●     The US Dollar Index held near a two-week high, keeping pressure on dollar-priced metals.

Fed Expected To Hold, But December Is Live

Today's decision is widely expected to leave the Fed funds rate at 3.75% to 4.00%, following September's quarter-point hike, the first increase since 2023.

Futures put the odds of a hold at around 90%, while pricing in roughly an 80% chance of another hike at the December 8-9 meeting. A Reuters poll found all 100 economists surveyed expect a December increase, with inflation running at 3.7% and oil prices rebounding on Wednesday after an attack on a Saudi refinery.

With no updated dot plot due this month, the statement at 18:00 GMT and Warsh's press conference half an hour later will carry the weight. Warsh has offered few hints, saying "I don't prejudge meetings," though he has stressed the Fed will deliver price stability. A dissent in favour of an immediate hike, with Beth Hammack and Lorie Logan seen as possible candidates, would reinforce the hawkish message.

Yields And Speculators Weigh On Silver

For a non-yielding asset like gold, a 10-year Treasury yield sitting around 5% is a heavy weight to carry.

The benchmark yield climbed above 5.3% earlier this month and remains well above its 12-month average of 4.45%. That has raised the opportunity cost of holding precious metals at a time when speculators were sitting on a crowded long position built up.

CFTC data shows managed money net longs in COMEX silver fell to 3,505 contracts in the week to October 20, from 5,619 a week earlier, as new short positions outpaced fresh buying. Broader speculative net length has slid from around 26,700 contracts in early September to 19,800, leaving positioning among the lightest of the past year.

The Debt Bill Could Test The Fed's Resolve

The more the Fed talks up further tightening, the more it adds to an already record interest bill for the US government.

Net interest costs rose 8% to $1.05 trillion in fiscal 2026, with gross federal debt now above $40 trillion. Treasury Secretary Scott Bessent has leaned on shorter-term borrowing, which reprices quickly when the Fed hikes. President Trump has continued to press for lower rates, while stepping up efforts to remove Fed Governor Lisa Cook.

That leaves Warsh, in his first year as chair, trying to convince markets he will keep tightening while the cost of doing so mounts for the Treasury. If investors begin to question how far the Fed is really prepared to go, the dollar and real yields could lose some of their support.

With speculative length already cut sharply and fresh shorts added, any such doubt could spark a sharp short-covering rally in precious metals.

Silver Technical Analysis

Silver remains firmly in a downtrend, with Friday's close below $54 marking a fresh low for 2026.

The break below the $55 area has turned former support into nearby resistance, while Tuesday's dip to $52.55 marks the immediate support. Below there, the psychological $50 level comes into focus, with the 52-week low of $46.52 the next major marker.

On the upside, a recovery back above $55 would be needed to ease the immediate pressure. Today's Fed decision and Thursday's PCE inflation and Q3 GDP data look like the most likely catalysts for the next move.

Source: SpreadEx | Silver, Daily Chart