Silver Pushes Above $66 as Oil Slump Eases Rate Pressure
Silver prices have risen above $66 an ounce after a sharp decline in crude oil prices eased rate pressure on the US bond market.
The metal's rebound, which has extended into its second day, was largely attributed to the tandem of softening oil and a calmer Treasury market. This combination has reduced the opportunity cost of holding silver, a non-yielding asset that doesn't pay interest.
The unexpected turn of events came from Saudi Arabia, which signaled it would explore additional energy-export options. This disclosure triggered an immediate correction in oil prices, followed by a decline in US government bond yields. The easing in fixed-income markets has given silver room to breathe after weeks of rate-driven turbulence.
However, the advance has run into a familiar ceiling, the Federal Reserve's rate hike last Wednesday has kept the dollar firm, capping upside for dollar-denominated commodities. Traders are also keeping an eye on exchange warehouse inventories, where 'registered' stocks available for immediate delivery have slipped below the 100-million-ounce mark.