Silver prices (XAG/USD) rose for the second consecutive day, trading around $65.80 per troy ounce during Asian hours on Friday, supported by a decline in US 10-year Treasury yields and easing inflation concerns due to falling oil prices [1]. The drop in crude prices followed reports that Saudi Arabia was working to restore flows through its East-West pipeline, and market attention shifted to upcoming meetings between US President Donald Trump and Gulf leaders [1].
The US 10-year Treasury yield fell to approximately 4.93% after briefly surpassing the 5.0% mark earlier in the week, providing support for non-yielding assets like silver [1]. Strategists at Societe Generale noted that the bond market benefited from lower oil and gas prices, with yields dipping to 4.93% as risk assets retreated following an upward revision of the Federal Reserve's dot plot and neutral rate, before yields recovered to 5.02% in Asia [1].
Investors are closely monitoring the Federal Reserve's monetary policy trajectory after its first rate hike in three years. Fed Chair Kevin Warsh maintained a hawkish stance, emphasizing that inflation remains elevated and that recent economic data has not shown significant structural improvement [1]. As a result, market expectations for another rate hike at the Fed's October meeting increased, with the CME FedWatch tool indicating a 53.1% probability, up from 44% the previous day [1].
The combination of lower yields and easing inflation concerns has provided a favorable environment for silver, which, as a yieldless asset, tends to benefit from declining interest rates [1].
CONCLUSION
Silver prices advanced near $66 per ounce, buoyed by a retreat in US Treasury yields and lower oil prices, which eased inflation concerns. Market participants are now pricing in a higher probability of another Fed rate hike in October, reflecting ongoing uncertainty about the central bank's policy direction. The overall market sentiment for silver remains cautiously positive amid these developments.