Silver Falls Sharply, "Higher-for-Longer" Expectations Strengthen
Silver prices (XAG/USD) fell on Thursday (March 26th), hovering around $68.50 at the time of writing, down around 3.85% intraday. This decline extended a correction after silver had previously recorded gains earlier in the week.
Silver was pressured by the return of demand for the US dollar (USD) as geopolitical tensions in the Middle East remained high. Iran's rejection of a US ceasefire proposal added uncertainty, while exchanges of aggression in the region kept markets in a risk-off mode. Under these conditions, the dollar was again viewed as a safe haven asset—which mechanically put downward pressure on USD-denominated commodities, including precious metals.
At the same time, rising oil prices rekindled concerns about global inflation and strengthened expectations that central banks would maintain high interest rates for longer. Investors increasingly considered the scenario of tight monetary policy, particularly from the Federal Reserve (The Fed).
This repricing of expectations pushed up US bond yields, making silver less attractive as a non-yielding asset. Fund flows have also begun to shift toward liquidity, as investors choose to increase cash positions to cover losses or reduce exposure amid heightened market volatility.
While geopolitical tensions typically support hedge assets, silver has not been able to capitalize on this sentiment, as a strengthening dollar and rising yields continue to dominate market dynamics.
Going forward, market participants will continue to monitor developments in the Middle East conflict, inflation trends—especially from energy—and the direction of central bank policies. These factors are expected to be the main drivers of silver's movement in the near term.
Source: Newsmaker.id
