Silver Slumps as Rate Hike Expectations Reach New Heights

Silver prices hovered near two-week lows on Tuesday, trading around $66.7 an ounce as investors awaited a potential US rate hike this month.

The metal has been under pressure due to rising oil prices and hawkish comments from Federal Reserve Chair Kevin Warsh, who stated that the Fed would 'have work to do' without clearer evidence of inflation moving back towards its 2% target.

The increased expectation for a rate hike, now priced in at over 65%, has typically been negative for precious metals. Higher energy costs have also stoked inflation concerns, further supporting the case for a near-term Fed rate increase.

Notably, silver still managed to gain over 15% in August after the US Treasury announced plans to double liquidity-support buybacks of longer-dated bonds, reviving the so-called debasement trade.