Silver Slumps Amid Fed Hawkishness and Rising Yields

Silver prices plummeted by 4% on Wednesday as the Federal Reserve's hawkish stance dominated market sentiment.

The decline came despite a surge in physical demand, which has been steadily draining exchange warehouses and tightening available supply. According to CME Group data, delivery notices for the September contract totaled 6,168, covering 30.84 million troy ounces, while total stocks stood at 338.1 million ounces.

The selloff was triggered by comments from John Williams, president of the New York Fed, who stated that another rate hike before year-end is a 'reasonable' prospect due to persistent inflation risks. This hawkish rhetoric has created an uncomfortable backdrop for assets like silver, which pay no income, and has lifted the opportunity cost of holding precious metals.

Higher yields on fixed-income securities have also made commodities more expensive for buyers outside the US, crimping global demand. The yield on ten-year Treasuries pushed above 5.1%, a level not seen in years, while bond markets reflected the shift in expectations almost immediately.