Silver Prices Volatile Amid Rising Treasury Yields and Stronger Dollar
Silver prices have been volatile in recent days, swinging from sharp rallies to pullbacks. Spot silver (XAG/USD) touched an intraday high of $58.65 on Thursday before retreating to around $57.80 per ounce. This price action is largely driven by the rapid rise in U.S. Treasury yields, which has diminished the appeal of holding non-yielding assets like precious metals.
The near-term downside pressure on silver stems from the increasing market expectations for further monetary tightening by the Federal Reserve. With investors assigning a nearly 75% probability to at least one interest-rate hike before its October meeting, U.S. Treasury yields have risen by roughly 1.8%, approaching a recent high of 4.71%. A sustained increase in yields suggests that the market is growing more cautious about the future real-interest-rate environment, thereby raising the cost of holding precious metals.
The U.S. dollar's rebound has also weighed on silver prices, as a stronger dollar typically dampens demand for dollar-denominated precious metals. The dollar index is currently trading near 101.00 after staging a recovery from its sharp pullback following Wednesday's Federal Reserve decision. Despite this downward pressure, silver remains supported by its industrial applications and global safe-haven demand.