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Silver prices (XAG/USD) surged beyond $80.00 on Thursday as lower U.S. Treasury yields and a decline in oil prices reduced expectations of aggressive Federal Reserve (Fed) rate hikes. The rally in precious metals reflects reduced risk appetite, with investors shifting toward safe-haven assets amid economic uncertainty. Lower oil prices also eased inflationary pressures, further diminishing the urgency for tighter monetary policy.
For traders, the move highlights the inverse relationship between Treasury yields and non-yielding assets like silver. As yields fall, the opportunity cost of holding gold and silver decreases, boosting demand. Additionally, the pullback in oil prices has weakened the U.S. dollar, indirectly supporting silver prices. This dynamic creates a favorable environment for precious metals in the short term.
Looking ahead, investors should monitor Fed statements and inflation data for clues about future rate decisions. A sustained decline in oil prices could further weaken the dollar and extend the rally in silver. However, a rebound in risk appetite or a rise in Treasury yields could reverse the current trend. Key levels to watch include $82.00 (resistance) and $78.00 (support).
