Silver Steadies on Lower Oil Prices

Silver steadied above $61 an ounce on Wednesday, halting a recent decline with falling oil prices offering some support despite continued pressure from elevated Treasury yields. Oil prices dropped sharply amid signs of improving energy flows from the Middle East and following another major release of emergency reserves in the US. Meanwhile, precious metals remain under pressure from rising Treasury yields, with the 30-year US bond yield climbing as high as 5.62%, reaching levels not seen since June 2002. Concerns over persistent energy-driven inflation, along with hawkish remarks from Federal Reserve officials, helped push yields higher. New York Fed President John Williams said Tuesday that another rate increase “late this year” could be appropriate, while noting that the Middle East conflict and the expansion of artificial intelligence remain key drivers of elevated inflation. Silver is on track to decline nearly 8% in September.

Silver prices rebounded toward $61 an ounce on Tuesday after tumbling to a more than seven-week low in the previous session, as investors awaited fresh US economic data for further clues on the Federal Reserve’s interest-rate path. The white metal fell more than 5% on Monday, pressured by a sharp rise in crude oil prices amid persistent concerns over potential disruptions to Middle East supplies. Higher oil prices could fuel inflationary pressures, increasing the likelihood that central banks maintain elevated interest rates for longer and weighing on non-yielding assets such as silver. Markets are currently pricing in nearly a 70% chance of a Fed rate hike as early as October and a 95% probability of an increase in December, according to the CME FedWatch Tool. Investors are now awaiting Wednesday’s ADP employment report, PCE inflation data and comments from Fed policymakers for further signals on monetary policy.

Silver traded around $60.5 an ounce on Tuesday after tumbling nearly 6% in the previous session, as persistent uncertainty over US-Iran negotiations kept oil prices elevated and increased pressure on the Federal Reserve to tighten policy further to curb inflation. Oil prices resumed their advance as Iranian officials reportedly expressed doubt about reaching a deal before US midterm elections in November, following President Donald Trump’s rejection of Tehran’s latest proposal. Treasury yields climbed to fresh multi-year highs amid growing inflation concerns and expectations of further rate hikes, weighing on non-yielding metals. Markets are now pricing in roughly a 70% probability of a Fed rate increase in October, following the central bank’s first rate hike in three years earlier this month. Attention now shifts to this week’s US economic data, including Wednesday’s PCE inflation report and Friday’s nonfarm payrolls figures, for further clues on the policy outlook.