Silver Prices Plummet as Stronger Dollar and Rising Yields Weigh
Silver prices plummeted more than 3% in European trading on Monday, hitting their lowest level in six weeks. The decline was fueled by a stronger US dollar and rising US Treasury yields ahead of an expected Federal Reserve interest rate hike this week.
The markets are currently pricing in an 86% probability that the Fed will raise interest rates by 25 basis points to counter mounting inflationary pressures in the country, according to the CME FedWatch Tool. This has led to increased demand for the US currency as a preferred alternative investment amid escalating geopolitical tensions.
The yield on the 10-year US Treasury note rose 0.3% today, extending its gains for a sixth consecutive session and approaching a three-year high near the 5% threshold. The Federal Reserve's monetary policy meeting began on Tuesday, with its decision due on Wednesday, where investors will look for further clues on the evolution of inflation and the path of interest rates in the coming period.