Silver Rebounds from Three-Week Low as Traders Await Key US Inflation Data

Silver prices rebounded sharply on Friday as traders bought the dip following a steep decline, with market focus now squarely on upcoming U.S. inflation data that could sway the Federal Reserve's next policy move.

Spot silver (XAG/USD) rose 1.3% to trade at $64.396 per troy ounce, recovering from an intraday low of $62.9965, its weakest point in over three weeks, according to data from Investing.com.

Inflation and Fed Policy in Focus

The recovery comes ahead of the U.S. August Consumer Price Index (CPI) report, the last significant inflation reading before the Fed's September 15–16 policy meeting. The precious metal had tumbled in the previous session after data showed U.S. producer prices accelerated in August, driven partly by energy costs.

Following Thursday's producer price data, markets priced in a roughly 71% probability of a 25-basis-point interest rate increase by the Federal Reserve next week. As a non-yielding asset, silver typically faces headwinds from higher interest rates, which increase the opportunity cost of holding the metal.

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Geopolitical and Technical Drivers

Underlying support for the metal comes from persistent geopolitical tensions between the U.S. and Iran near the Strait of Hormuz, which has sustained some safe-haven demand. However, mixed signals from Tehran regarding a potential safe shipping corridor have introduced fresh uncertainty, according to the source.

From a technical perspective, silver bounced off the key $63.00 support level. Analysts cited in the report suggest the recovery may be limited, as a bearish technical setup could encourage selling into the rally. Longer-term structural support is provided by supply constraints, with the Silver Institute confirming a fifth straight annual supply deficit is expected through 2025.

The broader market provided a constructive backdrop for the rebound, with major U.S. equity indices like the S&P 500 and Nasdaq posting gains of over 1.0% during the session.