• Silver falls as elevated oil prices due to US-Iran conflict fears reignite inflation concerns.
  • A strong dollar, rising Treasury yields, and hawkish Fed comments put additional selling pressure on Silver.
  • Traders await US September Nonfarm Payrolls data for signals on future Fed rate decisions.

Silver price (XAG/USD) loses ground after registering gains the previous day, trading around $60.30 per troy ounce during Asian hours on Friday. Silver price retreats as rising crude oil costs, driven by fears of a deteriorating conflict between the US and Iran, reignite broader inflation concerns.

Meanwhile, the non-yielding white metal faces additional selling pressure from a strengthening US Dollar (USD) and climbing Treasury yields, as investors recalibrate their expectations following recent hawkish remarks from Federal Reserve (Fed) officials.

Logan’s hawkish tilt boosts Dollar as higher yields seen reducing need for aggressive tightening

Fed’s Logan delivered a notably more hawkish message, with a FXS Speechtracker score of 9.2/10 compared to the established baseline of 8.1/10, underscoring a stronger conviction that policy rates must rise further. The key remark that “higher yields may also indicate increased term premiums, lowering need to tighten monetary policy” sits alongside calls for at least 50 bps more in rate hikes and several additional moves, suggesting that while bond market dynamics may do some of the tightening, the Fed stance is still not viewed as sufficiently restrictive. Logan’s emphasis on a strengthening economic expansion, a well-balanced labor market, and the need to revive price stability reinforces a hawkish tone supportive of the Dollar.

The FXS Fed Sentiment Index rose by 1.68 points to 136.59, signaling a clear move deeper into hawkish territory well above the neutral 100 threshold. This upward shift in the FXS Fed Sentiment Index, aligned with the elevated FXS Speechtracker score, confirms that Logan’s remarks are perceived as materially increasing expectations for further policy tightening and sustained support for the Dollar.

Fed’s Cook flags AI as inflation risk, keeping Dollar bulls alert

Fed’s Cook’s speech scores 7/10 on the FXS Speechtracker, only marginally above the 6.9/10 historical average, signaling a tone that is slightly more consequential but broadly consistent with the established baseline. The emphasis on AI as a top risk for 2027, already generating “pockets of inflation” and potentially triggering sector-specific supply shocks, tilts the message toward vigilance on inflation expectations and consumer confidence rather than comfort with the current disinflation trend. Cook’s focus on AI-driven productivity gains as a possible source of future inflation and the need to keep inflation expectations anchored reinforces a cautious, mildly hawkish bias for the Dollar.

Crude prices could further appreciate as geopolitical tensions flare up again. Reports suggest attacks on at least three tankers in the Strait of Hormuz and repeated strikes on regional refineries by Iran and its Houthi allies. The US is considering the deployment of another aircraft carrier to the Middle East, escalating the risk of broader conflict with Iran and threatening further disruption to energy supplies.

Additionally, the Pentagon is evaluating the deployment of 10,000 sailors and Marines to the Persian Gulf, giving President Donald Trump expanded operational flexibility should he choose to intensify military action against Iran, strikes he has reportedly signaled could resume after the November midterm elections.

Traders await Friday’s release of the US September employment data for signals regarding the future direction of Federal Reserve (Fed) monetary policy. Economists project Nonfarm Payrolls to show an addition of 90,000 jobs, marking a slowdown from the 162,000 recorded in the previous month, while the Unemployment Rate is expected to remain unchanged at 4.1%.

Silver FAQs

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.