Silver Slumps on Rate Hike Expectations

Silver prices have been feeling the heat as market expectations of further Federal Reserve rate hikes weigh on the metal. The precious metal traded around $64 an ounce on Friday, down more than 3% for the week. This decline is largely due to rising US Treasury yields and growing expectations of further Fed tightening.

As of now, markets are pricing in a nearly 70% chance of a hike in October and a 95% probability of another increase in December, according to the CME FedWatch Tool. The US central bank delivered its first rate hike in three years last week and signaled that further increases could follow.

Despite this, inflationary pressures remain elevated, while a series of stronger-than-expected economic data releases, including PMI figures showing US business activity grew at its fastest pace in five years in September, prompted markets to price in further Fed tightening. Meanwhile, oil prices paused a two-day rally as US and Iranian negotiators in New York reportedly explored a deal that could see Tehran reopen the Strait of Hormuz and Washington ease its economic blockade of Iran.