Silver futures slid on Monday as a fresh US-Iran escalation drove oil higher and lifted the dollar. Comex silver for September delivery fell $1.68 to $58.47 an ounce, and analysts expect elevated rate expectations to keep pressuring the metal.
Silver sold off on Monday as renewed military exchanges between the US and Iran pushed crude oil higher and strengthened the dollar, dragging the metal lower on both Indian and international exchanges. On the Multi Commodity Exchange, silver for September delivery declined by Rs 3,783, or 1.7 per cent, to Rs 2,18,881 per kg in turnover of 11,733 lots. Over the past week the metal plunged Rs 14,746, or 6.2 per cent.
Oil and the dollar undercut bullion
Traders said higher energy prices could stoke inflation and keep US interest rates elevated, prompting investors to trim exposure to precious metals. Rising crude followed concerns over disruptions to supplies through the Strait of Hormuz, according to Gaurav Garg, Research Analyst at Lemonn Markets Desk.
In the international markets, Comex silver for September delivery fell USD 1.68, or 3 per cent, to USD 58.47 per ounce in New York. FXEmpire put spot silver slightly lower, down $1.72, or 2.87%, at $58.14 early Monday as the dollar strengthened and Treasury yields climbed.
Rate fears build ahead of CPI
Higher crude has strengthened expectations that the Federal Reserve will keep rates higher for longer, brokerage firm Axis Securities said. The 10-year Treasury yield edged up to 4.583% early Monday, adding to the pressure on the metal. Brent crude hovered near USD 79 per barrel while WTI traded above USD 74, Kotak Securities’ Anindya Banerjee noted.
Investor appetite has held up despite the weakness, with silver exchange-traded funds attracting a record Rs 4,286 crore in inflows during June, according to Pinky Yadav of Choice Broking. Traders following how to trade silver now await Consumer Price Index and Producer Price Index reports due this week, which FXEmpire warns could reinforce existing selling momentum. Markets are also watching speeches by Fed officials Michelle Bowman and Christopher Waller for the next signal on policy.
Sources: Rediff MoneyWiz, FXEmpire
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