Silver Pressured by Stronger Dollar, Yields

Silver fell toward $64 an ounce on Thursday, extending losses the previous session, pressured by a stronger dollar and surging Treasury yields. Those moves came as stronger-than-expected US private-sector data heightened inflation concerns and strengthened expectations for further Federal Reserve rate hikes. Several Fed officials have also reiterated support for last week’s rate increase while warning about persistent inflation risks. Markets are now pricing in around a 70% chance of another Fed rate hike in October, up from 55% a day earlier. At the same time, oil prices rebounded as Iranian President Masoud Pezeshkian maintained a firm stance, saying Tehran would not allow freedom of navigation through the Strait of Hormuz while sanctions and a US blockade remain in place. Higher oil prices add to inflationary pressures, reinforcing expectations for a more hawkish interest-rate outlook.

Silver tumbled to $64.6 an ounce on Wednesday, pressured by a stronger dollar as stronger-than-expected PMI data and hawkish comments from Federal Reserve officials reinforced expectations for tighter monetary policy. The dollar climbed to fresh near two-month highs after US business activity accelerated for a fourth consecutive month in September, reaching its fastest pace in more than five years. Richmond Fed President Tom Barkin said higher interest rates, along with the prospect of further increases, could help temper inflation expectations without significantly weakening economic activity. The Fed raised rates by 25 basis points last week and signaled that another hike could come before year-end. Markets are pricing in a near 60% chance of an October increase, according to CME FedWatch. Meanwhile, geopolitical tensions remained in focus as President Trump threatened further action against Iran while also suggesting that a deal could be reached soon amid renewed diplomatic efforts.

Silver dropped below $66 an ounce on Wednesday, giving up gains from the previous session as hawkish signals from Federal Reserve officials outweighed the impact of falling oil prices on the inflation and interest rate outlook. On Tuesday, Richmond Fed President Tom Barkin warned that inflationary shocks could take time to fade, while Boston Fed President Susan Collins said she supported last week’s rate hike amid concerns that future inflation could remain above the 2% target. Meanwhile, oil prices extended their decline for a sixth straight session after President Trump said US officials had a “very good” meeting with Iranian envoys, while Tehran said it could reopen the Strait of Hormuz within seven days if the US eases military pressure and lifts its blockade of Iranian ports. Lower oil prices help reduce concerns over higher inflation and further rate hikes.