Silver Rallies for Two Consecutive Days; US Yields Hold the Key

Silver prices extended their gains for a second straight day during Friday's trading (Sept 18), rebounding sharply from the US$62 per troy ounce level touched earlier in the week. Spot silver (XAG/USD) recently traded around US$67.03 per troy ounce, with the precious metal finding support from a decline in US Treasury yields following earlier pressure caused by the Federal Reserve's decision.

A key factor driving silver's recovery is the drop in US government bond yields from recent highs. The 10-year Treasury yield had previously breached the 5% mark but subsequently underwent a correction. Lower yields reduce the opportunity cost of holding non-interest-bearing assets like silver.

On Wednesday, the Federal Reserve raised interest rates by 25 basis points to a range of 3.75%–4.00%, while signaling that further tightening remains possible. Fed Chair Kevin Warsh also emphasized that inflation remains too high and that the central bank stays committed to bringing price pressures back toward its target.

The decision initially drove a strengthening US dollar and rising Treasury yields, putting pressure on the precious metals market. However, as the market began to digest the Fed's decision, pressure in the bond market eased, and yields retreated from their highs. This environment allowed silver to regain strength.

Silver also benefited from positive momentum across the broader precious metals market. Gold continued its rebound after hitting a nearly six-week low, while platinum and palladium also strengthened. A decline in oil prices over recent sessions helped alleviate concerns regarding energy-driven inflation and the pressure for more aggressive interest rate hikes.

Newsmaker Analysis: Silver's rise above US$67 indicates that pressure from the Fed's hawkish policy is beginning to be offset by the correction in Treasury yields and improving sentiment toward precious metals. However, the possibility of further US interest rate hikes remains a key risk. As long as Treasury yields do not surge again and the dollar loses momentum, silver retains the potential to sustain its recovery, although volatility is expected to remain high. (arl)

Source: Newsmaker.id