Spot silver extended its winning streak to a second consecutive session on Friday, trading near $66.60 per ounce during Asian hours with a gain of roughly 2%. The precious metal, which pays no interest, found support as declining oil prices helped ease inflation worries, subsequently dragging government bond yields lower. With yields falling, silver's relative appeal compared to interest-bearing assets has strengthened, forming the core rationale behind this upward move.
Crude oil prices retreated following reports that Saudi Arabia is working to restore flows along its east-west pipeline, while market attention also shifted toward an upcoming meeting between U.S. President Donald Trump and Gulf leaders. In parallel, Treasury yields pulled back from recent multi-year highs, with the benchmark 10-year yield easing to around 4.93% after briefly breaking above 5.0% earlier this week. Strategists at a well-known institution noted that the bond market "opened this morning with a boost from lower oil and gas prices," citing reports that Washington plans to resume Iran talks with Gulf nations next week. They observed that "sellers initially flooded in after last night's hawkish Fed rate hike," and that "the 10-year Treasury yield fell to 4.93% as risk assets retreated following upward revisions to the dot plot and neutral rate, before recovering to 5.02% during Asian trading."
Investors continued to assess the Federal Reserve's policy trajectory following its first rate increase in more than three years. Fed Chair Warsh delivered a hawkish signal, stating that inflation has remained elevated for too long and emphasizing that recent summer economic data failed to show meaningful structural improvement. In the wake of his comments, market expectations shifted, with the CME FedWatch tool showing traders now pricing a 53.1% probability of another rate hike at the October meeting, up from 44% the day before. This hawkish pricing poses a potential headwind for silver, though falling oil prices and lower yields have for now provided an offsetting cushion.
Looking ahead, Bank of America forecasts silver to average $60 per ounce in the third quarter and $55 in the fourth quarter, with a full-year average near $68 for 2026 and a recovery to $70 in 2027. The bank points out that Fed rate hikes and rising real interest rates weigh on silver, and while industrial demand offers some support, it is insufficient to counterbalance the broader macroeconomic headwinds. Bank of America expects prices to face near-term pressure before gradually recovering, with long-term demand driven by green energy applications expected to support a silver price rebound.
As of 14:04 Beijing time, spot silver was quoted at $66.60 per ounce.