Silver Futures Fall Nearly 1% To ₹2.33 Lakh/Kg As US Dollar Weigh On Investors' Sentiment

Silver kept losing its shine in futures trade, falling nearly 1% to ₹2.33 lakh per kilogram on Wednesday amid a strong dollar and escalating US-Iran tensions which dented investors' appetite for the precious metal.

The white metal for December delivery declined for the fourth straight session, falling ₹1,841, or nearly 1%, to ₹2,33,600 per kg on the Multi Commodity Exchange (MCX).

"Silver extended their decline in Wednesday's session as rising US Treasury yields and a stronger dollar reduced demand for assets such as precious metals," said Gaurav Garg, Head of Research at Lemonn Markets Desk.

The pressure on silver came as geopolitical tensions added another layer of uncertainty to the Federal Reserve's interest-rate outlook.

Escalating US-Iran tensions pushed oil prices higher, raising concerns that renewed energy inflation could make the Federal Reserve more cautious about cutting interest rates, Garg added.

Higher US Treasury yields tend to make assets such as precious metals less attractive for traders, while a strong dollar makes bullion more expensive for global buyers.

In the overseas markets, Comex silver futures for the December contract fell 1.22% to $64.57 per ounce in New York.

"Silver declined to trade near $64 per ounce in the international markets as investors weighed the growing odds of an interest rate hike by the US Federal Reserve, a view reinforced by the recent jump in global bond yields and crude prices," Renisha Chainani, Chief Research Officer at Augmont, said.

Gaurav Garg noted that rising crude prices could add to inflationary pressures and remain a key risk for both domestic and international commodity rates.

According to analysts, the combination of firm energy prices, elevated bond yields, and a stronger US dollar has therefore kept silver under pressure.