Oil Spike Lifts Yields, Sends Gold and Silver Reeling

Gold and silver are both under pressure from rising oil prices, but silver is bearing the brunt of it. A surge in Brent crude to $109.97, a four-month high, has driven Treasury yields toward multi-year extremes and pushed up the odds of a September Federal Reserve rate hike. This combination raises the opportunity cost of holding metals that pay no yield.

The gold-to-silver ratio has broken above its descending trendline, with some technical analysts expecting further silver underperformance if the 67.5 to 68 zone holds as support. Both gold and silver are looking weak on the charts, with gold below its short-term moving average and silver closer to oversold territory.

Rising global yields and a hawkish expected Fed path are also making it more expensive for India to import crude oil, which could widen the country's trade deficit and pressure the rupee.