Silver Prices Drop 17% Amid Fed Rate Hikes
Silver spot prices fell to $54 per ounce as Federal Reserve interest rate hikes and industrial spending cuts offset a widening supply deficit.
The spot price of silver declined 17% over the past month to approximately $54 per troy ounce. This downturn follows a record high of $121.67 set on January 29, 2026. The price drop stems from rising inflation, which prompted industrial manufacturers, specifically solar panel makers, to reduce spending or transition to cheaper alternative metals.
Monetary policy shifts by the Federal Reserve System further pressured the metal. The central bank raised benchmark interest rates in September for the first time in three years, which strengthened the U.S. dollar and increased Treasury yields. These conditions made fixed-income investments more attractive to investors than non-yielding precious metals.
Despite these price declines, the Silver Institute and Metals Focus report that the silver supply deficit is expected to widen to 46.3 million ounces in 2026. Market analysts from JPMorgan and UBS predict a partial recovery by the end of the year, setting price targets of $63 and $70 per ounce, respectively, provided the Federal Reserve maintains current interest rates.
