Spot silver extended its winning streak to a third straight session during Friday's Asian trading hours, climbing as much as 1.65% to hit a fresh high of $69.20 per ounce — a level not seen since June 19 — before settling near the $69 mark. The metal is now up more than 6% for the week.
The catalyst behind this powerful move was the U.S. Treasury's announcement of an expanded long-duration debt repurchase program, which initially sent bond yields and the dollar sharply lower, providing robust support for silver. Even as yields clawed back most of Wednesday's decline over the following two sessions, silver managed to hold onto the bulk of its gains, reflecting lingering investor skepticism about the effectiveness of government efforts to control long-term borrowing costs, alongside rising safe-haven demand driven by heightened currency and bond market volatility.
However, escalating U.S.-Iran tensions are pushing energy prices higher, and the resulting inflation risks and heightened rate-hike expectations could cap silver's further upside potential.
What's driving the surge — Treasury buybacks and a weaker dollar
Silver's weekly gain of more than 6% has been primarily fueled by the Treasury's decision to at least double the scale of its long-dated debt buybacks — a move aimed at curbing borrowing costs that triggered a sharp slide in both Treasury yields and the dollar. Despite yields recovering most of Wednesday's losses in the sessions that followed, silver has retained its upward momentum. Investors remain doubtful that the government's efforts to manage long-term borrowing costs are anything more than a temporary measure, and demand for havens amid rising currency and bond market volatility continues to climb.
Strategists at Brown Brothers Harriman noted that long-end Treasury yields have largely reversed the decline triggered by Wednesday's buyback announcement, while the dollar's downtrend persists. They characterized the buyback as a debt-management operation — the initial reaction in long-end yields has mostly unwound, but the dollar keeps weakening, underscoring the market's unresolved questions about the policy signals embedded in the Treasury's actions.
Energy prices and inflation risks could cap silver's gains
That said, silver's path higher may be constrained by rising energy costs. The standoff between the U.S. and Iran over control of the Strait of Hormuz continues to escalate, keeping crude prices elevated and keeping inflation concerns and rate-hike bets firmly in focus.
TD Securities noted that the crude supply backdrop remains tight, with negotiations stalled for weeks and a shift toward economic pressure reinforcing the view that the market will remain undersupplied. The firm cautioned that Iranian attacks along Omani shipping routes could become a recurring theme, with geopolitical risks continuing to underpin a structurally tight oil market.
The Trump administration is preparing to impose severe economic restrictions on Iran — described by Trump as an "economic D-Day" — with formal details expected Monday. The measures are designed to sever Tehran's global commercial and financial networks, targeting banks, ship registrations, cash transfers, and smuggling activities in an effort to force Iran back to negotiations over its nuclear program and regional passage rights.
Institutional outlook
Goldman Sachs argued in its latest research that silver retains upside potential if industrial demand remains resilient, combined with the metal's broader safe-haven and investment appeal. The bank is focusing on global supply chains and new-energy-related demand, while flagging that real rates and dollar movements remain key variables to watch.
Citi analysts, meanwhile, believe investment demand will gradually overtake industrial demand as the primary price driver. Key catalysts include a potential de-escalation in the Strait of Hormuz and a shift toward a less hawkish Fed stance. Citi expects the global silver market to remain in deficit through at least 2027, with demand from artificial intelligence, 5G, and electric vehicles helping to partially offset the pressure from silver-reduction efforts in the solar sector. As a high-beta play on gold, silver is positioned to outperform when gold prices rise, with significant upside potential over the short to medium term.
Bottom line
Silver is up more than 6% this week, with the Treasury's expanded long-duration buyback program — which pushed bond yields and the dollar lower — serving as the core driver. Even though yields have recouped most of their losses, investor skepticism about the effectiveness of government borrowing-cost controls and safe-haven demand amid currency and bond market volatility continue to underpin prices. However, the escalating U.S.-Iran standoff is lifting energy prices, and rising inflation risks and rate-hike expectations could limit further upside. TD Securities has warned that Iranian attacks along Omani routes could become the norm, keeping crude supply tight.
As of 14:50 Beijing time on August 21, spot silver was trading at $68.96 per ounce.
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