Silver Price Forecast: XAG/USD rises to near $66.00 as US-10 year yield slides

Silver price (XAG/USD) gains ground for the second successive day, trading around $65.80 per troy ounce during the Asian hours on Friday. Non-yielding Silver gained support as falling oil prices helped ease inflation concerns, which in turn pushed government bond yields lower.

Crude prices declined following news that Saudi Arabia was working to restore flows through its East-West pipeline, while market focus also turned to upcoming meetings between US President Donald Trump and Gulf leaders. Concurrently, US Treasury yields pulled back from recent multi-year highs, with the benchmark 10-year yield falling to around 4.93% after briefly breaching the 5.0% mark earlier in the week.

Lower oil and gas prices offer brief relief to bonds as Fed hawkishness lingers

Strategists at Societe Generale report that the bond market “received a helping hand from lower oil and gas prices at the open this morning,” after news via Axios that “the US plans to resume negotiations over Iran with Gulf States next week.” They note that “sellers initially pounced on the hawkish Fed hike last night,” with “10y UST yields dipped to 4.93% as risk assets retreated on the upward revision of the dot plot and the neutral rate, before recovering to 5.02% in Asia.”

Meanwhile, investors continued to assess the path forward for Federal Reserve monetary policy after its first rate hike in three years. Fed Chair Kevin Warsh signaled a hawkish stance, stating that inflation has remained too high for too long and emphasizing that recent summer economic data failed to show meaningful structural improvement. In the wake of his remarks, market expectations shifted, with the CME FedWatch tool indicating that traders are now pricing in a 53.1% probability of another rate hike at the Fed's October meeting, up from 44% the previous day.