Silver Prices Tumble 45% from Record Highs Amid Geopolitical Tensions

Silver prices are under huge pressure after tumbling sharply from record highs made in January this year. Silver is now down over 45% from its January high of $121 per ounce, and has fallen more than 20% in just the last month. On May 8, silver trades around $67 per ounce — its lowest level in more than two months — and is down 10% year-to-date. The sell-off intensified over the weekend. After the big sell-off on Friday, MCX spot silver price dropped 6%, trading at Rs 2,41,405 on Monday noon, down from Rs 2,57,129 on Friday. Silver ETFs also saw a big decline, with almost all funds closing down over 6% on Monday. Stronger-than-expected US employment data on Friday last week weighed on precious metals by reinforcing expectations that the Federal Reserve could raise interest rates later this year. Markets are now pricing in roughly a 70% chance of a Fed rate hike in December, up from around 50% before the jobs report. A higher interest rate environment is typically negative for non-yielding assets like silver. Geopolitical tensions have added to the pressure. After Iran and Israel exchanged missile strikes on Monday, it has further raised concerns that the latest escalation could undermine President Donald Trump’s efforts to secure a new 60-day ceasefire agreement with Tehran. Trump urged both sides to avoid further military action and reiterated that negotiations remain ongoing. The conflict is also hitting energy markets. The prolonged conflict and the continued near-closure of the Strait of Hormuz have disrupted energy supplies from the Persian Gulf, supporting higher oil prices and heightening inflation concerns. Brent crude futures jumped more than 4% to above $97 per barrel on Monday. A stronger dollar has also hurt silver. The dollar index hovered around 100 on Monday after climbing more than 1% last week, supported by robust US labor market data that reinforced expectations of a Federal Reserve interest rate increase later this year. A stronger dollar makes dollar-denominated commodities like silver more expensive for foreign buyers, dampening demand. Kotak Securities – Commodity Research summed it up: “Bullion prices extended their decline as easing safe-haven demand and a stronger U.S. dollar weighed heavily on investor sentiment. Market sentiments remained fragile as stronger-than-expected US labor market data reinforced expectations of a more restrictive Fed policy path, raising concerns over the implications of higher borrowing costs for global industrial activity and metals demand.” : This article is for informational purposes only and does not constitute investment advice. Silver and commodity prices are subject to market risks and can be highly volatile. Readers are advised to consult a certified financial advisor before making any investment decisions. Past performance is not indicative of future results.