The iShares Silver Trust (SLV) experienced a sharp decline intraday on Tuesday, plummeting 5.25%. The sell-off reflects a significant downturn in the silver market and related precious metals assets.
The decline is attributed to a combination of factors pressuring the precious metals sector. A hawkish stance from the Federal Reserve has heightened expectations for potential interest rate hikes in 2026, erasing earlier hopes for cuts this year. This has pushed up U.S. Treasury yields, increasing the opportunity cost of holding non-yielding assets like silver. Concurrently, a strong U.S. dollar, trading near one-year highs, has exerted downward pressure on dollar-denominated silver prices.
Furthermore, safe-haven demand for precious metals has cooled as geopolitical tensions in the Middle East show signs of easing following reported progress in U.S.-Iran negotiations. This has prompted capital to flow towards the U.S. dollar and Treasuries, eroding the risk premium for silver and contributing to significant outflows from related ETFs.
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