Silver Surges Despite Strong Dollar: What is Driving the Trend?
Silver prices have shown significant momentum throughout this week, supported by declining oil prices which have helped alleviate concerns regarding prolonged inflationary pressures.
According to Refinitiv, silver prices in the final trading session of the week, Friday (1<0xE2><0x80><0xAF> June 2026), closed at US$66.23 per troy ounce, jumping 1.6% from the previous day’s trading. Throughout the week, silver prices surged by 2.76% on a point-to-point (ptp) basis.
Chris Gaffney, President of World Markets at EverBank, explained that the drop in oil prices reduces inflationary pressure, as oil serves as a primary driver of overall inflation.
“Precious metal investors had previously anticipated US interest rate hikes and had taken many short positions to capitalise on potential gold sell-offs. Those positions are now being rapidly closed,” said Chris Gaffney, as quoted by Reuters.
Crude oil prices fell by 2% on Friday, coinciding with easing concerns regarding supply disruptions from Saudi Arabia. While the decline in oil prices provides some relief regarding inflation fears, the risk of oil supply shocks from the Middle East remains a primary concern for the market.
Furthermore, the rise in silver aligns with the increase in gold, even as the US dollar experienced significant volatility this week. The dollar index remained at the 100 level for three consecutive days, while 10-year US Treasury yields remained above 5%, reaching their highest levels since 2007.
Like gold, silver offers no yield; therefore, rising US Treasury yields typically make gold and silver less attractive. Two anomalies suggest that oil price movements are now being closely scrutinised by the market, as they are directly linked to the rate of inflation and could have a significant impact on interest rates.
The Federal Reserve (The Fed) raised the benchmark interest rate by 25 basis points to a range of 3.75%-4% on Wednesday this week, hinting at the possibility of further rate hikes in the coming months.
According to the CME FedWatch tool, market participants now see approximately a 55% chance of another US interest rate hike when central bankers meet in October 2026.