Silver Tumbles as Fed Rate Hike Bets Surge on Strong US Producer Price Data

Silver prices plummeted by around 4% to $64.5 an ounce on Thursday as investors became increasingly confident that the Federal Reserve would raise interest rates next week.

The US producer price data, released earlier in the day, showed a 0.4% increase in August, with annual producer inflation rising to 5.4%, exceeding market expectations of 5.3%. The jump was largely driven by soaring energy prices and evidence of stronger cost pass-through across other sectors.

The data reinforced expectations for tighter monetary policy, prompting markets to price in a more than 70% chance of a Federal Reserve rate hike on September 16. Meanwhile, investors also increased their bets on further European Central Bank tightening after the central bank raised borrowing costs and warned that inflation risks remained tilted to the upside.