Silver prices (XAG/USD) extended their rally for a third consecutive day, trading around $68.70 per troy ounce during Asian hours on Friday, approaching the $69.00 mark amid heightened volatility in global currency and bond markets [1]. The metal is up nearly 6% this week, driven by increased investor demand for safe-haven assets following the US Treasury Department's announcement to at least double its long-term debt buybacks, a move intended to contain borrowing costs [1]. This announcement initially drove Treasury yields and the US dollar sharply lower, supporting silver's upward momentum. However, US long-term Treasury yields have since retraced most of their initial drop, while the dollar's decline has continued, reflecting ongoing market uncertainty regarding the effectiveness of the Treasury's debt-management strategy [1].
Elias Haddad of Brown Brothers Harriman described the Treasury buyback initiative as a debt-management exercise, noting that while the initial move in longer-dated yields has largely unwound, the dollar remains under pressure, highlighting persistent market unease about the policy's implications [1]. Despite silver's recent gains, further upside could be limited by rising oil prices, which are fueling inflationary concerns and raising expectations for potential interest rate hikes [1]. These inflationary pressures are being exacerbated by escalating tensions between the United States and Iran over the strategic Strait of Hormuz, which is keeping crude oil supplies tight [1].
TD Securities commented that negotiations with Iran have been on hold for weeks, and the shift toward economic pressure is expected to keep crude flows critically tight, with Iranian aggression in the Oman lane likely to persist [1]. In response, Washington is preparing to implement severe economic restrictions on Iran, described as an "economic D-day," with formal details expected on Monday. These measures aim to cut off Iran's access to global financial and commercial networks, targeting banks, shipping, cash transfers, and smuggling operations to force negotiations over its nuclear program and regional transit [1].
The combination of safe-haven demand, policy-driven market volatility, and geopolitical risks has contributed to silver's strong performance this week. However, the prospect of higher energy prices and inflation could cap further gains for the non-yielding metal [1].
CONCLUSION
Silver's surge near $69 reflects robust safe-haven demand amid US Treasury policy actions and escalating geopolitical tensions. While the market backdrop remains supportive, rising oil prices and inflation risks may limit further upside for silver in the near term.