Silver prices closed the week with a slight weakening after\nexperiencing volatile movements throughout the trading period.<\/p>\n
According to Refinitiv data, spot silver closed at US$6\/troy ounce on\nFriday (4\/9\/2026). On a weekly basis, silver prices fell by\napproximately 0.3% compared to the previous Friday\u2019s close.<\/p>\n
Movement throughout the week was quite erratic. Prices had\nstrengthened mid-week before facing sharp downward pressure on Friday\nafter US labour market data once again altered market expectations\nregarding the direction of Federal Reserve (The Fed) interest rates.<\/p>\n
Silver Squeezed by Fed Interest Rates<\/strong><\/p>\n Pressure on silver intensified on Friday after US labour data\nindicated that the labour market remains solid.<\/p>\n As reported by Reuters, US job growth increased sharply in August,\nwhile the unemployment rate held steady at 4.1%. This data has led the\nmarket to increasingly price in a potential interest rate hike by the\nFederal Reserve during its meeting on 15-16 September.<\/p>\n Reuters noted that the probability of an interest rate hike rose to\napproximately 65%, up from 55% before the labour report was released.\nConsequently, silver prices plummeted by 3% to US$64.92 per troy ounce\nduring Friday\u2019s trading.<\/p>\n However, this pressure eventually eased. According to Refinitiv data,\nsilver managed to recoup some of its losses to close trading at US$66.19\nper troy ounce.<\/p>\n Rising interest rate expectations act as a headwind for silver\nbecause precious metals do not provide a yield. When interest rates and\nbond yields rise, the relative attractiveness of silver diminishes.<\/p>\n Next Week Will Be Decisive<\/strong><\/p>\n Market focus has now shifted to US inflation data, which is due to be\nreleased next week.<\/p>\n According to the official schedule from the Bureau of Labor\nStatistics (BLS), the August Producer Price Index (PPI) will be released\non 10 September, followed by the Consumer Price Index (CPI) on 11\nSeptember 2026.<\/p>\n Reuters suggests that this inflation data will provide further clues\nregarding the direction of the Fed\u2019s policy. Inflation that is higher\nthan expected could further strengthen the case for an interest rate\nhike and once again pressure silver prices.<\/p>\n Conversely, lower inflation could dampen rate hike expectations and\ncreate space for silver prices to strengthen again.<\/p>\n Fundamentals Remain a Support<\/strong><\/p>\n Amidst short-term pressures, the market fundamentals for silver\nremain relatively tight.<\/p>\n The Silver Institute estimates that the global silver market will\nexperience a deficit for the sixth consecutive year in 2026, amounting\nto approximately 67 million ounces. Physical investment is expected to\nrise by 20% to 227 million ounces, even though industrial demand is\nprojected to decline by about 2% to 650 million ounces.<\/p>\n This implies that while short-term risks for silver stem from the\nFed, US inflation, and yield movements, supply deficits could act as a\nsupport if macroeconomic pressures begin to subside.<\/p>\n For Indonesia, a rally in silver prices would be good news for mining\nproducers but could represent a cost pressure for industrial users.\nWhile the impact on the broader Indonesian economy is limited, for\nmining companies with exposure to silver, these commodity price\nmovements can affect revenues and margins.<\/p>",
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