Silver prices tumbled more than 6% toward $88 on Monday, erasing an earlier 3% rally as a powerful “risk-off” shift and a surging US dollar overwhelmed initial safe-haven inflows. Prices had first spiked to $96.40 following the initial strikes on Iran, but market attention quickly pivoted to the economic implications of a potential closure of the Strait of Hormuz, a key chokepoint for about 20% of global energy shipments and a serious threat to industrial activity worldwide.
The prospect of a severe hit to energy-intensive manufacturing weighed heavily on the demand outlook for silver, particularly in the solar and electronics industries, leading the metal to lag behind gold’s comparatively steady performance. Downward pressure intensified after the ISM Manufacturing Prices Index surged to 70.5, an 11.5-point jump that signaled a renewed inflationary pulse and sharply reduced expectations for Federal Reserve rate cuts.
As the US dollar climbed to a five-week high and yields on 10-year Treasuries moved higher, the opportunity cost of holding non-yielding assets like silver increased significantly. At the same time, leveraged futures traders accelerated liquidations to cover broader equity-market losses, adding a further layer of selling pressure to the already strained silver market.
