Spot silver fell for a third consecutive session, trading near $50.65 per ounce during European hours on Friday, October 30, touching an 11-month low.
Persistent U.S. inflation and resilient economic growth have reinforced market expectations that the Federal Reserve will raise rates later this year, placing downward pressure on silver prices.
Inflation Data: PCE Posts Largest Monthly Gain Since March, Core Measure Rises to 3.1%
Inflationary pressure was concentrated in the U.S. PCE price index: it rose 0.5% month-over-month in September, the largest increase since March, pushing annual inflation to 3.6%, while core PCE climbed to 3.1% year-over-year.
This set of data indicates that price pressures have not steadily faded as the market had hoped, but have instead reaccumulated driven by energy and services prices, providing a data basis for the Fed to maintain its tightening bias.
Growth Resilience: Q3 GDP Grows 3.4%, Beating Expectations, Driven by Consumption and AI Investment
Meanwhile, the broader economy continued to show strength. U.S. third-quarter GDP grew at an annualized 3.4%, exceeding the 3.2% market expectation, mainly driven by steady consumer spending and strong investment in AI-related sectors.
The combination of simultaneously strong growth and inflation means the Fed lacks a data basis to pivot toward easing, and real rate expectations have risen accordingly, weighing on non-yielding assets.
Policy Pricing: Fed Holds Steady, December Rate Hike Odds at About 75%
In response to these economic conditions, the Fed chose to keep rates unchanged on Wednesday ahead of the midterm elections. Nevertheless, investors continued to price in a strong possibility of future tightening.
According to the CME FedWatch tool, traders currently assign about a 75% probability to a 25-basis-point rate hike in December, a modest retreat from the 84.2% recorded the previous day.
Although the probability was slightly revised down, it remains at a high level, indicating that the market has not changed its judgment on the direction of policy, but retains slight reservations about the certainty of its pace.
Sector Divergence: Silver and Platinum Group Metals Underperform, Industrial Attributes Amplify Tightening Pressure
According to TD Securities, the post-FOMC market picture continues to highlight divergence within the precious metals sector.
The firm noted that "gold remains relatively resilient after the FOMC, while industrial precious metals lean downward, with silver and platinum group metals significantly underperforming, as macroeconomic headwinds and the prospect of tighter policy weigh on the demand outlook."
This underperformance highlights the growing pressure on metals with stronger industrial attributes relative to gold, as investors reassess the demand outlook under a potentially tighter policy regime.
Silver's industrial demand share is higher than that of gold, making it more sensitive to growth prospects in an environment dominated by tightening expectations, which is the structural reason why silver has fallen significantly more than gold in this round of declines.
Conclusion
Silver fell for a third consecutive session and hit an 11-month low, with the core pressure coming from Fed rate hike expectations reinforced by rising U.S. inflation and resilient economic growth—September PCE rose 0.5% month-over-month, the largest gain since March, while third-quarter GDP grew 3.4%, beating expectations. Although December rate hike odds eased from 84.2% to about 75%, they remain at a high level.
Divergence within the sector is equally critical: gold remains relatively resilient, while silver and platinum group metals significantly underperform due to their stronger industrial attributes and greater sensitivity to the demand outlook. In a macroeconomic environment dominated by tightening expectations, silver's industrial demand pricing faces sustained pressure, and its short-term weak trend is difficult to reverse.
(Spot silver daily chart, source: Yihuitong) As of 16:08 Beijing time, spot silver was quoted at $50.61 per ounce.
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