• Silver declines as higher crude oil prices, driven by Middle East energy risks, and renewed inflation fears.
• Easing Federal Reserve rate-hike expectations following soft US labor data provided crucial support for silver prices.
• Multi-decade US Treasury yields, driven by high debt issuance and inflation risks, continued to cap Silver’s upside.

Silver price (XAG/USD) declined after opening at a bullish gap, remaining in positive territory and trading around $60.90 per troy ounce during Asian hours on Wednesday. Non-yielding Silver experienced downside pressure as a rebound in crude oil prices, driven by persistent Middle East supply risks, kept inflationary concerns and rate-hike expectations firmly in focus.

Oil markets climbed as escalating threats to regional energy flows overshadowed signs of recovering supply. Attacks on tankers in the Strait of Hormuz have intensified, with the UK Maritime Trade Operations reporting nine incidents already this month. Adding to regional tensions, a Saudi-led coalition intercepted and destroyed a Houthi ballistic missile targeting Khamis Mushait in Saudi Arabia, while traders also weighed potential production disruptions from a developing storm threatening major US energy hubs in the Gulf of Mexico.

Despite these headwinds, Silver prices found some support as expectations for further Federal Reserve tightening eased after last week’s softer US labor market data. According to the CME FedWatch tool, interest-rate swaps reflect roughly a 20% probability of a rate hike at the Fed’s upcoming October meeting. Nonetheless, US Treasury yields held near multi-decade highs, underpinned by sticky inflation risks, growing fiscal deficits, and heavy debt issuance tied to expanding AI investments.

Systematic Silver flows eyed as TD Securities flags key trigger level

According to TD Securities, their Advanced CTA Position Tracker highlights that trend-following funds remain only modestly engaged in silver, with CTAs currently holding a small net short around “-2% of maximum historical size.” The report identifies a key downside trigger level at “$60.71 -2.9%,” which is part of TD’s scenario analysis mapping how systematic flows could evolve across both “big downtape to big uptape” paths in silver over the coming year.