Silver Drops to $64.10 as Fed Hike Odds Spike to 69.7%
Silver trades near $64.10 as strong US data and hawkish Fed comments push rate hike expectations higher.
Key points
- Silver traded near $64.10 on Thursday, marking its second straight daily loss.
- Odds of an October Fed rate hike rose to 69.7% from 48.7% last week.
- US manufacturing PMI hit 52.0, reinforcing expectations for tighter monetary policy.
Silver prices fell to $64.10 per troy ounce on Thursday. This marks the second consecutive day of losses for the metal. The decline reflects rising pressure from a stronger US Dollar and higher Treasury yields.
Economic Data Fuels Hawkish Fed Expectations
US manufacturing data came in stronger than expected. The S&P Global PMI index reached 52.0 in September. This result helped offset slight declines in services and composite activity measures.
Market odds for a 25-basis-point rate hike in October jumped to 69.7%. This is a sharp increase from 48.7% last week. Traders now await the weekly Initial Jobless Claims report for more clues.
Fed Officials Signal Continued Tightening
Fed official Barr delivered a strongly hawkish message. His speech scored 8 out of 10 on the FXStreet tracker. This is above the historical average of 7 out of 10.
Barr stated that further rate hikes are likely needed. He noted that risks to achieving 2% inflation have increased. The Fed’s sentiment index also rose by 0.42 points to 148.81.
Geopolitical Tensions Add Inflation Pressure
Crude oil prices rose amid uncertainty in US-Iran talks. Iranian President Masoud Pezeshkian warned against yielding to threats. He affirmed Iran’s right to pursue nuclear technology for economic development.
Pezeshkian also mentioned restricting navigation in the Strait of Hormuz. This threat persists as long as US sanctions remain active. Higher oil prices exacerbate inflationary pressures and support the case for prolonged monetary tightening.
