Silver jumps 3.3% as dollar weakness outweighs yield rise
Spot silver climbed to $67.91, gaining 3.3% on a sharp decline in the US dollar index.
Spot silver surged $2.16 to trade at $67.91 late in the Wednesday session. The metal gained 3.29% as dollar selling overwhelmed a five-basis-point jump in long-dated Treasury yields. This price action occurred despite rising odds of a Federal Reserve rate hike.
Treasury Secretary Scott Bessent launched a $6 billion bond buyback program, which added volatility to the fixed-income market. Long-dated yields spiked briefly before easing, yet the dollar index continued to slide. Silver buyers interpreted the weaker currency as a primary driver for the metal's rally.
Dollar weakness drives the rally
The US dollar index fell even as yields rose, creating a favorable environment for silver. A weaker dollar reduces the cost of the metal for overseas buyers. This dynamic attracted international demand during the session.
Bessent's intervention in the bond market aimed to support the long end of the yield curve. The strategy sought to manage risk associated with Japan's $1.1 trillion in US debt holdings. Despite these efforts, the currency remained under pressure.
Fed policy fails to deter buyers
Market odds for a Federal Reserve rate hike next week stand near 60%. The central bank under Chair Kevin Warsh maintains a hawkish stance on inflation. Historically, higher rates suppress non-yielding assets like silver.
Silver traders ignored the rate hike probability and focused on the dollar's decline. The currency side of the trade carried more weight than the interest rate side. This divergence allowed the metal to sustain its upward momentum.
Technical levels define the trend
The daily swing chart shows an uptrend with a main bottom at $63.31. A previous main bottom sits at $62.56 from August 19. The current price action is testing the retracement zone between $67.25 and $68.17.
A sustained move above $68.17 would put the $71.18 swing top in play. Breaking through $71.18 would signal a resumption of the broader uptrend. The short-term trading range remains defined by these key technical levels.
According to GN auto markets/commodities: silver prices, the combination of falling dollar and persistent physical demand supports the current bid. Industrial users continue to require the metal for production. The market remains focused on the dollar's trajectory as the primary catalyst for silver.
