Rising Yields Crush Silver Prices as Fed Hike Odds Surge
Silver prices on the Multi Commodity Exchange (MCX) plummeted to around ₹230,966 per kg in early trade, down 1.34 percent or ₹3,133 from the previous close of ₹234,099.
The sharp drop in silver prices is largely attributed to a shift in the global rate backdrop, which has pushed US Treasury yields toward multi-year highs and sharply raised the odds of a September Federal Reserve rate hike.
A fresh surge in crude oil has driven up US Treasury yields, with the 10-year yield hitting close to 4.97 percent, its highest level in about three years. Market-implied odds of a 25 basis point Fed hike at the September 16 meeting have also jumped above 72 percent.
Silver's extra vulnerability comes from its dual identity as both an industrial and monetary asset. Unlike gold, which is mostly used as a safe-haven asset, silver has heavy industrial use in electronics, solar panels, and manufacturing, making it more susceptible to the same yield pressure that weighs on gold.