Silver Tumbles Over 4% to Four-Week Low Amid Weak Demand

Industry Insights from Next Move Strategy Consulting

Silver prices declined sharply in European trading on Monday, falling by more than 4% and extending losses for the fourth consecutive session. The metal dropped to its lowest level in four weeks, driven primarily by weakening investment demand for precious metals as expectations for global central banks to cut interest rates continue to diminish amid rising energy prices.

Sustained Selling Pressure Weighs on Silver

The ongoing decline reflects reduced investor appetite, particularly as inflation concerns tied to higher oil prices reshape monetary policy expectations. Hopes for interest rate cuts have faded, creating a less favorable environment for non-yielding assets such as silver.

Despite the steep losses, downside pressure was partially offset by a decline in the US dollar against a basket of global currencies. The dollar weakened due to corrective movements and profit-taking at the start of a week marked by key central bank meetings, including the Federal Reserve.

Price Overview and Market Performance:

• Silver fell 4.3% to $77.08, its lowest level since February 19.

• The session opened at $80.57 and reached a high of $81.57.

• Prices dropped 3.9% in the previous session, marking a third consecutive daily loss.

• Silver recorded a weekly loss of 4.6%, its second straight weekly decline.

Rising Oil Prices Intensify Market Pressures

Global oil prices continue to surge, with Brent crude rising for the fifth consecutive day and trading above $100 per barrel. The ongoing US-Israeli war against Iran has heightened risks to oil infrastructure and disrupted global supply routes, particularly with the closure of the Strait of Hormuz.

Elevated oil prices are contributing to renewed inflationary pressures by increasing transportation and production costs. This scenario is expected to push central banks toward maintaining or potentially raising interest rates.

While precious metals are traditionally viewed as a hedge against inflation, higher interest rates increase the attractiveness of yield-bearing assets, thereby reducing demand for silver.

Global Central Banks in Focus

This week marks a critical period for monetary policy, with at least eight major central banks—including the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan—set to hold meetings.

Market expectations suggest that interest rates will remain largely unchanged. According to the CME FedWatch tool, there is a 99% probability that US interest rates will stay steady in the current meeting, with only a 1% chance of a 25-basis-point cut. Expectations for April also remain stable, with a 95% likelihood of unchanged rates.

US Dollar Movement Offers Limited Support

The US dollar index declined by 0.3% on Monday, retreating from a ten-month high of 100.54 points. The pullback is attributed to profit-taking and investor caution ahead of central bank decisions and ongoing geopolitical developments.

Although the weaker dollar provided some support to silver prices, it was insufficient to counterbalance the broader bearish sentiment.

NMSC Viewpoint: Interplay of Inflation and Interest Rate Expectations

According to Next Move Strategy Consulting, the current decline in Silver prices reflects a critical intersection of inflationary pressures and shifting monetary policy expectations. Rising oil prices are reinforcing inflation concerns, which in turn are reducing the likelihood of interest rate cuts by major central banks.

This dynamic creates a challenging environment for precious metals, as higher interest rates enhance the appeal of yield-generating assets, diverting investment flows away from silver. At the same time, geopolitical tensions and supply disruptions continue to add complexity to market movements, contributing to heightened volatility.

NMSC notes that near-term price direction will remain closely tied to central bank policy outcomes and inflation trends, with investors expected to remain cautious amid evolving global economic conditions.

Outlook Amid Policy Uncertainty

With the Federal Reserve’s policy meeting set to begin Tuesday and conclude Wednesday, markets are closely watching for signals on future monetary direction. Current expectations indicate that interest rates will remain unchanged for the second consecutive meeting.

As geopolitical tensions persist and inflationary pressures build, silver’s near-term trajectory remains tied to evolving central bank policies and global economic conditions.

Source: Economies

Prepared by: Next Move Strategy Consulting