Silver Price Plunges as Hawkish Fed Narrative Takes Hold
The Silver price (XAG/USD) has fallen by 4.3% to around $61.50 during the European trading session on Monday, as elevated US Treasury Yields have diminished its appeal.
The white metal's decline is attributed to higher oil prices due to persistent disruptions in global energy supply amid Middle East conflicts and increased possibilities of more interest rate hikes by the Federal Reserve (Fed) in the near term.
US data resilience, particularly in weekly initial jobless claims, has also lifted bond yields as the Fed tightening narrative builds. Analysts at Deutsche Bank highlight that recent economic data releases have been strong, with US weekly initial jobless claims coming in at 197k in the week ending September 19 (vs. 200k expected), underscoring the strength of the labour market.
The current narrative suggests the US economy is growing strongly, which would give the Fed space to keep hiking rates. The CME FedWatch tool shows an almost 68% chance that the Fed will hike interest rates again in the October policy meeting.