Silver Prices Fall Amid Oil Surge and Fed Rate Hike Fears

Silver prices fell on Indian commodity exchanges on September 2, as crude oil surged above $92 a barrel and Federal Reserve rate hike odds climbed to 70 percent.

The Strait of Hormuz situation continued to drive up energy prices, but unlike in the past, it didn't lift silver prices. Instead, the dollar strengthened, making silver more expensive to hold.

Fed Chair Kevin Warsh has cited inflation as his justification for a rate hike, and markets are pricing in a 70 percent probability of a November rate increase. This has led to a stronger dollar, which is weighing on silver prices.

Silver's industrial footprint ties its fortunes to manufacturing demand and growth expectations, making it more vulnerable to rate hikes than gold.