Last Updated on 01/10/2026
- Silver retreats as softer-than-expected August PCE inflation data pushed CME FedWatch expectations for an October rate hike down to around 38%.
- August core PCE inflation increased by just 0.2%, while annual headline inflation eased to 3.4%, below the 3.7% forecast.
- Further upside for Silver may be limited by elevated Treasury yields, higher oil prices, and persistent US-Iran geopolitical tensions.
Silver (XAG/USD) rebounds after declining in the previous session, trading near $60.90 per troy ounce during Asian trading hours on Thursday. The non-yielding metal is finding support as expectations for further Federal Reserve rate hikes have eased following weaker-than-expected US inflation data released on Wednesday.
The CME FedWatch Tool shows that markets are now pricing in around a 38% probability of a Fed rate hike in October, down from approximately 51% before the latest PCE figures. Market attention is now turning to Friday’s US Nonfarm Payrolls (NFP) report, with economists expecting 90,000 new jobs in September and the unemployment rate to hold at 4.1%.
The softer inflation outlook followed the release of August US PCE data. The headline PCE price index increased 0.3%, below the 0.4% forecast, while core PCE rose 0.2%, also missing expectations of 0.3%. On a year-over-year basis, headline PCE inflation slowed to 3.4%, significantly below the 3.7% consensus estimate.
Despite the improved rate outlook, Silver’s upside may remain constrained by broader market pressures. Elevated oil prices and Treasury yields continue to counterbalance the support provided by reduced expectations for Fed tightening. Geopolitical uncertainty also remains elevated, with limited progress in US-Iran negotiations despite signs of a recovery in Middle East oil flows. Investors remain cautious about whether the supply recovery can be sustained without a formal agreement to end the conflict, particularly as Washington and Tehran continue to claim control over the strategic waterway.
US Treasury yields have also risen to multi-decade highs as markets assess the risk that energy-related inflation could remain persistent and encourage tighter monetary policy. The 10-year Treasury yield is holding near 5.298%, while the 30-year yield was last higher by almost 4 basis points at 5.633%.
US data revisions leave Fed tightening bias intact
TD Securities described the latest revisions to US PCE inflation and GDP data as a “mixed bag,” reflecting upward revisions to past growth alongside downward revisions to inflation. However, the firm emphasized that the underlying trend remains more important, arguing that solid economic growth combined with renewed inflation risks is likely to remain central to the Fed’s policy outlook.
Against this backdrop, TD Securities continues to anticipate a Fed rate increase in October, while acknowledging that policymakers could adopt a more gradual approach. The latest data revisions therefore have not materially altered the firm’s broader expectations for the path of monetary policy.
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