Key Takeaways:
Silver rose above $60.00 an ounce on July 1, gaining 4.4% as the Federal Reserve struck a less hawkish tone, indicating a potential pause in its tightening cycle.
The shift in monetary policy expectations boosted demand for precious metals, with spot silver trading at $60.42 as of the New York close, according to Bloomberg data. The move marks a rebound from $57.49 on June 26, when silver was down nearly 20% year-to-date from its January highs. Silver futures also advanced, settling up 3.8% on the session.
Markets had been pricing in a Fed rate hike by September, according to the CME FedWatch tool, after new Chair Kevin Warsh's first meeting took a hawkish tone in June. Both the European Central Bank and the Bank of Japan raised interest rates this month in response to the Iran war energy shock. A less restrictive Fed reduces the opportunity cost of holding non-yielding assets like silver and gold. Spot gold also recovered, trading at $4,010.20 an ounce after briefly falling below $4,000 in the prior session, while gold is down about 7.5% year-to-date.
Silver's rally comes after a volatile first half of 2026. The metal surged 135% in 2025 before suffering its biggest single-day decline since the 1980s in late January. Profit-taking and shifting macro expectations have driven sharp swings. Macquarie strategists said in a June note that "price action is back to being macro driven" as rising expectations of a Fed rate hike. They forecast silver averaging $70 an ounce in the fourth quarter of 2026 before declining to $65 by the end of 2027, as inflation and the probability of a Fed hike limit further upside. "Bullish investor sentiment fueled by tighter supply, low inventories and strong demand has caused prices to outperform gold, making it more vulnerable to a retracement," they added.
The $60 level has acted as a key psychological threshold. A sustained break above it could trigger further momentum buying, though Macquarie cautioned that "the higher inflation and bond yields move, the greater the downwards pressure." For context, silver's all-time high above $70 was set in early 2026 during the peak of its record rally, and the metal remains about 14% below that level. Compared to gold, silver has been more volatile — the gold-to-silver ratio stood at about 66 on July 1, reflecting silver's relative outperformance during the session. The next catalyst for silver will be the Fed's July meeting and upcoming US inflation data, with OCBC strategists noting that "until real yields ease or ETF liquidation slows, rallies may remain vulnerable to fading."
This article is for informational purposes only and does not constitute investment advice.
