Silver Drops to Two-Month Low Amid Rising Treasury Yields
Silver prices have dropped to near $60.50 per troy ounce, marking a two-month low, as rising US Treasury yields and a stronger US dollar outweigh softer jobs data. The decline comes despite temporary support from weaker employment figures and reduced expectations of a Federal Reserve rate hike in October. Geopolitical tensions in the Middle East have also driven demand for the US dollar as a safe haven, following Houthi strikes in Saudi Arabia that targeted military sites, an oil facility, and key transportation hubs.
The pressure on silver intensified as US Treasury yields surged to 24-year highs, driven by a global bond selloff and persistent inflation in the service sector. Despite market expectations of a Fed rate pause, the combination of higher yields and a firm dollar continues to weigh on precious metals. Strategists at HSBC noted a sharp repricing in long-dated bonds, with G7 yields rising by roughly 1% since January, signaling broader implications for fixed income investors.
Silver remains a popular investment for diversification, often compared to gold due to its safe-haven status and industrial applications. While it is less popular than gold, silver prices are influenced by factors such as geopolitical instability, interest rates, US dollar strength, and industrial demand. The Gold/Silver ratio can also provide insights into the relative valuation between the two metals.