Key Highlights

  • Silver fell 3.6% to $55.89 an ounce on Thursday, giving back recent gains.
  • Gold fell 1.3% to about $4,089, so the gold-to-silver ratio stands near 73 on our calculation.
  • The Fed is expected to hold next week; markets price about a 90% chance of a December hike.
  • The ECB and Bank of Japan are also expected to hold next week.

Silver dropped toward $56 an ounce on Thursday, giving back recent gains as higher oil prices fed Inflation worries and traders leaned toward further interest-rate increases.

The metal fell $2.07, or 3.57%, to $55.89 an ounce at 0800 GMT, according to market reports, a steeper decline than gold’s 1.3% fall to about $4,089. Silver had traded near $57.33 earlier in the Asian session.

Why Silver Falls Harder

Silver has a dual identity: it is a precious metal that tracks gold and an industrial input that tracks the economy. That makes it more volatile than gold in both directions. Kitco has noted that silver remains more vulnerable to shifts in industrial sentiment, which are in focus after a global selloff in technology and artificial-intelligence stocks on Thursday.

At current prices the gold-to-silver ratio is about 73, a figure derived from the two prices rather than a data-provider number. A higher ratio means silver is cheaper relative to gold, and it tends to rise when growth worries dominate.

The Oil Channel

Crude advanced after a drone attack near Saudi Aramco’s Shaybah oilfield killed two people, and after the U.S. ordered some personnel and family members to leave its missions in Saudi Arabia. Brent rose toward $112 a barrel. Reports also said the U.S. and Israel have drawn up plans for renewed strikes on Iran following the Nov. 3 midterm elections.

Higher energy prices feed inflation, which keeps central banks on a tightening path. Silver pays no interest, so the prospect of higher rates reduces its appeal.

Central Banks

The Federal Reserve is widely expected to keep rates unchanged at its Oct. 27-28 meeting, after Chair Kevin Warsh’s remarks last Friday did little to change that view. Markets still anticipate a possible increase in December, which CME’s FedWatch tool put at about 90%. The Fed raised rates in September for the first time since 2023.

The European Central Bank and the Bank of Japan are also expected to maintain their current rates next week, according to market commentary. Earlier this week, the ECB was widely expected to deliver at least one more 25-basis-point increase before year-end, and Bank of Japan Governor Kazuo Ueda said underlying inflation was “quite close” to the 2% target, leaving the door open to further tightening.

Dollar, Yields and Equities

A firmer dollar makes silver more expensive for holders of other currencies, and Treasury yields near 5.1% raise the Opportunity cost of holding it. The global tech selloff has also weighed on sentiment toward industrial metals. Copper futures fell to a five-week low near $6.40 a pound on the same pressures.

Investors who follow the metal through listed vehicles, such as Pan American Silver Corp. (NYSE: PAAS) or iShares Silver Trust (NYSE Arca: SLV), are exposed to the same swings, though no price moves in those names are reported here.

What to Watch

The key signposts are the Fed’s Oct. 28 decision and Warsh’s comments, oil prices and developments in the Gulf, and the dollar. A de-escalation in the Middle East that lowers oil would reduce inflation fears and could support both silver and gold. A further jump in crude would do the opposite.

Disclaimer: This content is for informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any security, currency or commodity. Prices, probabilities and estimates are from third-party sources, change quickly and may differ by provider. Investors should conduct their own research and consult a licensed financial adviser before making Investment decisions.