Silver fell below $60 an ounce to a fresh nine-week low on Wednesday. The metal led a broad precious-metal retreat that also pushed gold below $4,100 for the first time since August 5.
Multiple pressure points hit the metal at once. China’s Golden Week holidays have drained market liquidity. Soaring U.S. borrowing costs have made it more expensive to hold bullion that pays no yield. Meanwhile, Deutsche Bank issued a note saying silver scarcity is over and a surplus is coming.
The drop is a sharp unwinding for a metal that briefly topped $121 at the start of 2026, when physical shortages and safe-haven buying set off a frenzy. Since then, inventories have been rebuilding, and industrial demand has weakened.
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The Golden Week Void
Physical and domestic precious-metals trading in China stops during the Golden Week break. With the Shanghai Gold Exchange and Shanghai Futures Exchange closed for holidays, global trading volumes decline – especially during Asian hours. That seasonality pattern leaves order books thinner and more prone to volatility.
With Chinese buyers offline, spot markets lose a key source of support, so prices face more choppy trading and downward slippage. In these conditions, routine risk-off selling or algorithmic stop-loss orders have an outsized effect, and even moderate profit-taking can become a steep intraday decline.
Yields Squeeze Bullion
The bigger macro headwind is coming from bond markets. Yields on 10-year Treasuries reached 5.36%, while 30-year borrowing costs hit 5.72%, the highest since June 2002.
“For a non-yielding asset, all else equal, that is going to be challenging because gold has to compete against that yield level in people’s portfolios,” Amy Gower, commodities strategist at Morgan Stanley, said last week.
Persistent inflation and heavy government borrowing are fueling bets that policy will stay tight after the Federal Reserve’s Sept. 16 rate hike. CME FedWatch data show traders pricing in less than a 20% chance of another increase on Oct. 28, but a 69% chance of an increase by year’s end.
“Inflation is frustrating and must be fixed,” Jeffrey Schmid, president of the Kansas City Fed, said Tuesday.
The dollar is trading near September’s 17-month high, adding to the pressure. Deutsche Bank estimates that silver-backed funds could release about 40 million ounces by December 2027 if outflows follow patterns from past Fed hiking cycles.
“Peak silver scarcity is clearly in the rear-view mirror,” Deutsche Bank’s head of metals research Daniel Ghali wrote in a report.
More than 914 million ounces of silver sat in London’s commercial vaults at the end of August. Over 300 million ounces of that was freely available, up 70% since October 2025. Stockpiles have also climbed in CME and Shanghai warehouses.
“Combined inventories in London and CME warehouses should put to rest any concerns around metal scarcity,” Ghali wrote.
Solar manufacturing leads the demand loss, as the bank expects use to fall by 20% this year and 33% in China, owing to substitution efforts.
Indian imports, meanwhile, are running 25% below year-ago levels after higher duties curbed buying. That trend supports Deutsche’s view that the market is moving toward a surplus by 2027.
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