Silver Slide Extends as Yields, Geopolitical Risks Rise

Key Moments

Silver Under Pressure as Yields Hit 2025 High

Silver prices (XAG/USD) continue to retreat for a second consecutive session, changing hands near $63.40 per troy ounce during Asian trading on Wednesday. The non-yielding metal remains under pressure as a broad-based selloff in global bonds pushed the US 10-year Treasury yield up to 4.80%, its highest level since early 2025.

The move in yields has revived market anxiety about entrenched inflation and the risk that interest rates may need to rise further, weighing on demand for assets that do not generate income, such as Silver.

Geopolitical Tensions Support Oil and Inflation Premiums

Inflation concerns are being compounded by a jump in crude oil prices, triggered by mounting geopolitical tensions between the United States and Iran that threaten energy flows from the Middle East.

According to TD Securities, the latest escalation between the US and Iran is reinforcing the perception that the regional environment remains highly unstable. Strategists at the firm note that the renewed tensions “continue to highlight how flimsy any deal or MoU headlines really are,” highlighting markets’ vulnerability to additional shocks and helping maintain a risk premium across the energy complex.

Mixed US Data Keeps Focus on Upcoming Labor Reports

Recent US macroeconomic releases have painted a mixed backdrop for investors. July JOLTS job openings came in at 7.27 million, undershooting expectations. Meanwhile, the ISM Manufacturing PMI eased to 54.6 in August from 55.6 previously.

Although the ISM reading missed estimates, it remained comfortably above the expansion threshold, signaling that manufacturing activity is still growing. Market participants are now looking ahead to the ADP employment report and Friday’s nonfarm payrolls for clearer indications of the Federal Reserve’s future rate path.

Fed Tone Stays Hawkish, Supporting the Dollar

Federal Reserve Vice Chair for Supervision Michael Barr maintained a hawkish stance, reinforcing the possibility of additional tightening if inflation fails to ease. His remarks were assessed by the FXS Speechtracker with a score of 7/10, compared with a historical average of 6.8/10, indicating a slightly more hawkish-than-normal tone.

Barr stressed that inflation “remains too high” even as the labor market is stable and growth, supported by artificial intelligence, is described as “solid.” The conditional policy guidance – favoring unchanged rates only if there is confidence that inflation is moderating, while explicitly keeping the door open to another rate hike if it does not – points to an asymmetric reaction function skewed toward further tightening. This stance preserves upside risks for the US Dollar against low-yielding currencies.

At the same time, the FXS Fed Sentiment Index edged down by 0.42 points to 128.86. While this marks a slight decrease in perceived hawkishness, the index remains well above the neutral 100 level. The configuration suggests that, even though the specific speech was only modestly more hawkish than the historical Speechtracker average, the broader policy backdrop continues to lean clearly hawkish, in a way that is generally supportive for the Dollar.