Silver prices moved lower in Thursday's trading session, extending a pullback as a resurgent U.S. dollar and climbing bond yields dampened appetite for the non-yielding precious metal. The sell-off also weighed on major silver-focused exchange-traded funds and mining stocks in after-hours activity.
Spot silver traded near $82 per troy ounce by the late afternoon in New York, marking a decline of approximately 1.5% for the day. The retreat occurred despite ongoing geopolitical tensions in the Middle East, which have previously provided intermittent safe-haven support for precious metals. The market's focus shifted decisively toward macroeconomic forces, specifically the strength of the U.S. currency and debt markets.
The U.S. dollar index advanced 0.5%, while the yield on the benchmark 10-year U.S. Treasury note climbed to a three-week high near 4.14%. This dynamic creates a significant headwind for silver, which, unlike bonds, does not offer investors any interest income. As yields rise, the opportunity cost of holding zero-yield assets like silver increases, prompting outflows.
The pressure was evident across the silver complex. The iShares Silver Trust (SLV), a leading ETF tracking the metal's price, shed value in late trading. Major mining equities also retreated. Pan American Silver (PAAS), Hecla Mining (HL), and First Majestic Silver (AG) all posted notable declines in the after-hours session.
Market strategists noted the competing forces at play. "Traders are juggling higher oil prices and the threat of inflation, but rising yields tend to put pressure on precious metals," observed Bart Melek, global head of commodity strategy at TD Securities. Earlier in the week, silver had found brief support following an escalation in U.S.-Israeli military action against Iran and a related surge in oil prices, but that bid quickly evaporated as financial conditions tightened.
Bob Haberkorn of RJO Futures characterized the broader precious metals sell-off as a "flight to cash." He suggested that if geopolitical tensions were to escalate further, gold and silver could see renewed safe-haven bids, with silver particularly poised for a sharp rebound once such buying resumes.
Despite Thursday's weakness, silver remains a standout performer for the year, holding a gain of over 16%. This follows a retail-driven rally that propelled the metal to an all-time high of $121.60 on January 29. Fundamental supply-demand dynamics also provide a supportive backdrop. In February, the Silver Institute projected a sixth consecutive annual structural deficit for the metal, with demand expected to exceed supply even as industrial consumption cools and both recycling and mine output increase.
The immediate catalyst for the market will be the U.S. Labor Department's February employment report, scheduled for release at 8:30 a.m. ET on Friday. The data is expected to heavily influence expectations for Federal Reserve monetary policy. A softer-than-expected jobs number could revive bets on imminent interest rate cuts, potentially offering relief to silver prices. Conversely, a robust report, coupled with persistent strength in the dollar and yields, could extend the metal's decline, especially given its significant industrial ties to sectors like electronics, electric vehicles, and solar power.
Looking beyond the payrolls data, market participants are also awaiting U.S. Consumer Price Index (CPI) inflation data on March 11, followed by the Federal Reserve's next policy meeting on March 17-18. Current market pricing, according to Reuters, suggests traders expect the Fed to hold interest rates steady this month. The interplay between economic data, central bank policy, and geopolitical events will likely dictate silver's trajectory in the coming weeks.
