Silver (XAG/USD) trades lower on Thursday, falling 3.20% to around $84.70 at the time of writing as investors take profits after the metal’s recent rally.
The decline comes as higher US Treasury yields and a firmer US Dollar (USD) reduce the attractiveness of non-yielding assets, while markets reassess expectations for the Federal Reserve’s (Fed) policy path
The correction in Silver follows a sharp advance earlier in the week, with the metal previously benefiting from technical momentum and stronger demand for industrial metals. OCBC strategist Christopher Wong recently noted that Silver’s rally appeared increasingly stretched in the short term, warning that overbought conditions and potential “buy the rumor, sell the fact” behavior could encourage profit-taking pressure. The US Dollar remains supported by a hawkish repricing of Fed expectations.
Recent inflation data continues to suggest persistent price pressures, while labor market conditions remain relatively stable, reducing the urgency for policymakers to ease monetary policy. Kansas City Fed President Jeffrey Schmid said on Thursday that continued inflation remains the most significant risk facing the economy. Schmid added that although the United States (US) economy remains resilient and the labor market continues to function effectively, elevated Oil prices still affect household spending and business costs.