The biggest trigger behind the sell-off is the growing expectation of higher US interest rates. Traders have stepped up bets for a further Federal Reserve rate hike later this year. Rising inflationary pressures, fuelled by higher oil prices amid the Middle East conflict, have further strengthened expectations of tighter monetary policy.
Silver’s safe-haven appeal has also taken a hit. Investors typically turn to safe-haven assets during periods of uncertainty. However, prolonged inflation that prompts central banks to raise interest rates can create a difficult environment for precious metals, including silver.
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Rising bond yields have added to the pressure. Unlike bonds, silver does not generate interest or any other income. As government security yields climb, investors can earn better returns from fixed-income assets, making non-yielding investments such as silver relatively less attractive.
Higher yields also tend to strengthen the US dollar, putting further pressure on precious metals by making them more expensive for buyers using other currencies. Investors often shift…