Silver Prices Torn Between Geopolitics and Bond Yields
The silver market is caught in a tug-of-war between geopolitical tailwinds and rising bond yields, causing its price to fluctuate wildly. After briefly reclaiming the psychologically important threshold of $60 an ounce on Wednesday, silver dropped back down to $58.77 on Thursday, a 1.59% decline that erased the previous session's gains.
The ongoing conflict in the Middle East is fueling risk premiums and driving up oil prices to multi-week highs, which in turn has stoked fresh inflation concerns. This dynamic has been particularly challenging for silver, which offers no yield and suffers when real rates rise.
The bond market also weighed on silver with the 10-year US Treasury note yield climbing to 4.714% on Thursday, its highest level since the current move began. Market pricing now reflects a roughly 78% probability of a Federal Reserve rate hike in September, which is pressuring investors.