Warsh’s Jackson Hole speech is still in the price. He said Friday the central bank has more work to do on inflation and left a September rate increase on the table. The dollar firmed Monday. Treasury yields climbed. Silver was already under pressure from Friday’s reversal and Warsh gave sellers another reason to lean on the market.
Oil jumped Monday after reports of fresh U.S. military strikes near the Strait of Hormuz. Silver traders already know what higher crude does to the inflation outlook. That is not a headline the metal can ignore when the Fed is already watching prices. The combination kept silver on the defensive for most of the session. Prices ran from $67.47 to $65.67 in a few hours as the rate story and the oil story both worked against the metal at the same time.
The late bounce off the lows took the worst of the damage out but the daily close is still red. Silver went from $65.67 back to $66.11 by late afternoon. That stopped the bleeding from Friday. It did not reverse it.
Factory Demand Held the Floor
Physical demand from factories and solar-panel makers did not disappear because Warsh gave a speech. That bid is the reason silver found buyers near $65.67 instead of breaking through. Dealers noted that inventories have not flooded the market. When the first wave of selling exhausted itself Monday afternoon, there was enough demand underneath to catch the metal.
The recovery was not aggressive. A move from $65.67 to $66.11 is stabilization, not a reversal. But after a 4% Friday and a full day of selling pressure Monday, holding that low was the minimum the demand side needed to deliver. The month is still up 14%. The year is still up more than 60%. Nobody ran for the exits at $65.67 and that tells you something about how the physical market is reading this pullback.