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Silver slides toward $65 as oil rebound and rate hike bets bite
Silver fell 2.3% to about $65.05, as oil rose more than 5% for the week and Fed hike odds climbed ahead of Wednesday CPI.
Silver prices extended their decline on Tuesday, trading around $65.05, down 2.3% on the day, after retreating from a seven week high near $66.59 reached Monday, FXStreet reports.
The drop reflects renewed pressure on precious metals as oil prices rise and investors build expectations for tighter US monetary policy. FXStreet links the oil move to uncertain negotiations aimed at reopening the Strait of Hormuz, with Iran conditioning any reopening on demands including war reparations and sanctions relief, though Qatar said talks between Oman and Iran are at an advanced stage.
Rising oil has also helped keep US Treasury yields elevated, which weighs on silver because it does not pay interest. At the same time, the CME FedWatch tool points to a 52.0% chance of a 25 basis point rate hike at the September meeting, up from about 44.0% the prior day, after remarks from Cleveland Fed President Beth Hammack.
Investors are now focused on US Consumer Price Index data due Wednesday, which could further influence rate hike expectations and the dollar, according to FXStreet. Stronger inflation could keep pressure on silver, while easing price pressures could reduce it.
Latest closeSilver $65.88 ▲4.0%