Silver prices (XAG/USD) experienced a sharp decline on Friday, falling to $78.44 per troy ounce, which represents a 6.02% drop from Thursday's price of $83.47 according to FXStreet data [1]. Another report notes that silver was down over 5% to near $79.00 during the European trading session, with an intraday low of $77.57 [3]. Despite this steep daily loss, silver prices have still increased by 10.35% since the beginning of the year [1].
The primary driver behind the selloff in silver is the significant surge in US bond yields, with 10-year US Treasury yields rising 1.66% to 4.53%, the highest level in almost a year [3]. This has diminished the appeal of non-yielding assets like silver, as higher yields on interest-bearing assets attract investors away from precious metals [3]. The US Dollar Index (DXY) also posted a fresh over two-week high at 99.20, further pressuring silver prices [3].
Market expectations have shifted towards a more hawkish Federal Reserve stance, with the CME FedWatch tool showing a 52.3% probability that the Fed will keep rates in the current 3.50%-3.75% range and a 47.4% chance of at least one rate hike this year [3]. This is a notable increase from the 23.5% probability before the latest US Consumer Price Index (CPI) data release [3]. Elevated energy prices amid US-Iran tensions and improving US-China trade relations are also cited as contributing factors to the current market environment [3].
Technical analysis indicates that silver's near-term tone is broadly neutral after the pullback from recent highs, with the Relative Strength Index (RSI) at 50.54 suggesting a loss of directional conviction [3]. The first notable support is at the rising trend-line zone around $75.83, while resistance is seen at the May 13 high of $89.38 [3]. The Gold/Silver ratio rose to 58.15 from 55.72, indicating silver's underperformance relative to gold [1].
Gold (XAU/USD) has also come under pressure, falling for a fourth consecutive day to near $4,550 as the US Dollar strengthens and expectations of a hawkish Fed persist [2]. Technical analysis shows gold trading at $4,553.16, below key moving averages and with the RSI in oversold territory at 27, suggesting that while downside pressure dominates, the pace of the decline could slow if sellers begin to take profits [2].
CONCLUSION
Silver and gold both faced significant selling pressure amid surging US bond yields and a stronger US Dollar, driven by expectations of a more hawkish Federal Reserve. The sharp drop in silver prices, alongside a rising Gold/Silver ratio, highlights the market's risk-off sentiment and shifting investor preferences. Market participants will be closely watching upcoming economic data and Fed communications for further direction.