Silver Prices Plunge, Volatility Soars as Yields and Dollar Strengthen

Spot silver (XAG/USD) fell sharply again on Friday (May 15), extending its reversal after a strong rally earlier in the week. At 1:22 PM New York time, silver was at US$76.56/ounce, down 8.16% on the day, with a daily range of US$75.67–US$84.00.

The main pressure came from a combination of rising US yields and a stronger dollar, which reduced the appeal of non-yielding metals. In the macro market, the DXY was around 99.16, while the US 10Y yield was around 4.593%—both of which reinforced the headwind for precious metals.

These movements reversed the early-week euphoria driven by interest in AI-related stocks and industrial metals for data center needs (cables, power systems, cooling), coupled with speculation about fuel availability in Peru (a major producing country). However, this narrative was later "debunked" by renewed inflation concerns—the market demanded higher yields—which triggered profit-taking and the unwinding of speculative positions.

On the energy side

On the energy side, persistently high oil prices helped maintain dunia inflation concerns, reinforcing the "higher for longer" assumption on interest rates. On the same screen, WTI was recorded at around US$105.09 and Brent at around US$109.19, increasing market sensitivity to energy-based inflation.

Despite the sharp correction, the silver market remains vulnerable to relatively small capital flows due to its smaller physical market size compared to other major commodities. Going forward, market participants will focus on the direction of yields and the dollar, the stability of energy prices, and whether "AI trade" sentiment recovers or continues to weaken—as these factors are the ones that most quickly change silver's volatility. (arl)

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