Silver Prices Halved Amid Rising Real Yields and Rate-Hike Momentum

Silver prices have plummeted to roughly half their peak levels, with investment demand visibly cooling. The precious metals market is stepping back from its 'safe-haven premium' as investors flee in response to rising real yields and renewed rate-hike momentum.

Unlike gold, silver carries a heavy industrial demand component, which shapes its price dynamics differently. According to the Silver Institute, 60% of global silver supply was used for industrial purposes last year, while physical investment accounted for just 16%. This means that silver prices reflect not only its role as an 'investment asset' but also as an 'industrial metal' that responds to the economic cycle.

The yield on the US 10-year Treasury has climbed sharply since March, from around 1.7% to roughly 2.4%. Higher rates can boost demand for bonds while simultaneously pressuring investment flows into precious metals, which generate no interest income. Analysts point to this as a key variable eroding silver's appeal.

Speculative demand has wavered, amplifying the correction. Reports suggest that when Kevin Warsh was floated as a candidate for the next chair of the US Federal Reserve, investors who had bet on silver fled the market abruptly. Silver prices reportedly plunged more than 31% in a single day, the steepest one-day drop in 46 years.