A rise in US Treasury yields and a stronger dollar pressured silver prices, which then retreated, awaiting stabilization.
2026-05-12 15:21:59
Spot silver (XAG/USD) fell significantly during Tuesday's European trading session, dropping to around $84.30. Silver had previously broken through the $87 mark, reaching a near two-month high, but profit-taking emerged in the precious metals market as the US dollar index and US Treasury yields rose in tandem. The core factors driving this silver pullback were primarily the strengthening of the US dollar as a safe haven and market concerns about the potential continuation of the high-interest-rate environment in the US. The recent deterioration of the situation in the Middle East, with ceasefire negotiations between the US and Iran stalled, has further fueled market anxieties. While the market had previously hoped for a diplomatic resolution, the rejection of the latest peace proposal has significantly increased concerns about a potential resurgence of military action.
US President Trump stated on Tuesday that the ceasefire agreement is currently under "life support" status. Markets believe this means the situation in the Middle East could deteriorate further, and the shipping risks in the Strait of Hormuz remain. The Strait of Hormuz handles approximately 20% of global maritime energy transport; any escalation of the situation could severely disrupt the global energy supply chain.
Against this backdrop, global market risk appetite has declined significantly, and the US dollar, as the global reserve currency, has regained support from safe-haven inflows. Simultaneously, rising US Treasury yields have also increased pressure on the precious metals market. Silver is typically a non-interest-bearing asset; when US Treasury yields rise, the opportunity cost for investors to hold precious metals increases, thus silver is prone to short-term corrections.
In addition, the market is closely watching the upcoming release of the US April Consumer Price Index (CPI) data. The market expects the overall US CPI to rise to 3.7% year-on-year in April, the highest level since September 2023, while core inflation is expected to rise to 2.7% year-on-year.
If US inflation continues to exceed expectations, the Federal Reserve may extend its high-interest-rate policy for an extended period, which would typically put downward pressure on precious metals in the short term.
The market is now reassessing the Federal Reserve's future policy path. Previously, the market had anticipated a potential rate-cutting cycle from the Fed, but with the continued rise in international oil prices and the deteriorating situation in the Middle East, concerns about the "risk of double-dip inflation" have resurfaced.
Against this backdrop, US Treasury yields rebounded, while the US dollar index rose continuously, putting significant pressure on silver. However, in the medium to long term, the overall upward trend in silver prices remains intact. Compared to gold, silver, in addition to its safe-haven properties, is also an important industrial metal, widely used in new energy, photovoltaic, and electronics manufacturing industries. Therefore, the growth in global demand for new energy and the improvement in demand for industrial metals continue to support silver prices in the long term.
From a technical perspective, silver is currently undergoing a technical correction after rising from its highs. The daily chart shows that although prices have pulled back, they remain above the 20-day exponential moving average (EMA), indicating that the medium-term bullish structure remains intact. In terms of technical indicators, the RSI has fallen from its previously severely overbought zone to around 68, suggesting that short-term market overheating has eased somewhat, but overall upward momentum has not completely disappeared. The MACD indicator continues to operate above the zero line, indicating that the current pullback is more of a temporary correction than a trend reversal.
From a key support level perspective, the area around $83 forms the first major support level, while the trendline support formed in early May is located around $82.25. If silver breaks below the $82 area, it may fall further to around $79; however, if it regains its footing above $87, the market may challenge the $90 mark again. Looking at the 4-hour chart, silver has entered a short-term consolidation phase, with increasing divergence between bulls and bears. With the US CPI data approaching, short-term market volatility may further increase.
Overall, the silver market is currently trading on a combination of "safe-haven demand," "high inflation risk," and "the logic of the Federal Reserve's high interest rates." While the situation in the Middle East continues to support safe-haven demand for precious metals, the rise in the US dollar and US Treasury yields is exerting significant downward pressure on silver in the short term.
Editor's Summary : The silver market has gradually entered a high-level consolidation phase after its previous unilateral rise. Although the escalating situation in the Middle East continues to boost safe-haven demand, the simultaneous strengthening of US Treasury yields and the US dollar has put significant short-term pressure on precious metals. The market's biggest focus remains on US inflation data. If the US CPI continues to exceed expectations, the Federal Reserve may extend the period of maintaining high interest rates, which will put some pressure on silver. However, from a long-term perspective, silver possesses both safe-haven and industrial demand attributes, and the growth of the new energy industry continues to provide important support for silver. Therefore, the current pullback is more of a technical correction at high levels than a reversal of the medium- to long-term trend. In the future, the market will still need to focus on US inflation data, changes in the Middle East situation, and the US dollar's performance, as these factors will continue to determine the direction of silver's next stage.
US President Trump stated on Tuesday that the ceasefire agreement is currently under "life support" status. Markets believe this means the situation in the Middle East could deteriorate further, and the shipping risks in the Strait of Hormuz remain. The Strait of Hormuz handles approximately 20% of global maritime energy transport; any escalation of the situation could severely disrupt the global energy supply chain.
Against this backdrop, global market risk appetite has declined significantly, and the US dollar, as the global reserve currency, has regained support from safe-haven inflows. Simultaneously, rising US Treasury yields have also increased pressure on the precious metals market. Silver is typically a non-interest-bearing asset; when US Treasury yields rise, the opportunity cost for investors to hold precious metals increases, thus silver is prone to short-term corrections.
In addition, the market is closely watching the upcoming release of the US April Consumer Price Index (CPI) data. The market expects the overall US CPI to rise to 3.7% year-on-year in April, the highest level since September 2023, while core inflation is expected to rise to 2.7% year-on-year.
If US inflation continues to exceed expectations, the Federal Reserve may extend its high-interest-rate policy for an extended period, which would typically put downward pressure on precious metals in the short term.
The market is now reassessing the Federal Reserve's future policy path. Previously, the market had anticipated a potential rate-cutting cycle from the Fed, but with the continued rise in international oil prices and the deteriorating situation in the Middle East, concerns about the "risk of double-dip inflation" have resurfaced.
Against this backdrop, US Treasury yields rebounded, while the US dollar index rose continuously, putting significant pressure on silver. However, in the medium to long term, the overall upward trend in silver prices remains intact. Compared to gold, silver, in addition to its safe-haven properties, is also an important industrial metal, widely used in new energy, photovoltaic, and electronics manufacturing industries. Therefore, the growth in global demand for new energy and the improvement in demand for industrial metals continue to support silver prices in the long term.
From a technical perspective, silver is currently undergoing a technical correction after rising from its highs. The daily chart shows that although prices have pulled back, they remain above the 20-day exponential moving average (EMA), indicating that the medium-term bullish structure remains intact. In terms of technical indicators, the RSI has fallen from its previously severely overbought zone to around 68, suggesting that short-term market overheating has eased somewhat, but overall upward momentum has not completely disappeared. The MACD indicator continues to operate above the zero line, indicating that the current pullback is more of a temporary correction than a trend reversal.
From a key support level perspective, the area around $83 forms the first major support level, while the trendline support formed in early May is located around $82.25. If silver breaks below the $82 area, it may fall further to around $79; however, if it regains its footing above $87, the market may challenge the $90 mark again. Looking at the 4-hour chart, silver has entered a short-term consolidation phase, with increasing divergence between bulls and bears. With the US CPI data approaching, short-term market volatility may further increase.
Overall, the silver market is currently trading on a combination of "safe-haven demand," "high inflation risk," and "the logic of the Federal Reserve's high interest rates." While the situation in the Middle East continues to support safe-haven demand for precious metals, the rise in the US dollar and US Treasury yields is exerting significant downward pressure on silver in the short term.
Editor's Summary : The silver market has gradually entered a high-level consolidation phase after its previous unilateral rise. Although the escalating situation in the Middle East continues to boost safe-haven demand, the simultaneous strengthening of US Treasury yields and the US dollar has put significant short-term pressure on precious metals. The market's biggest focus remains on US inflation data. If the US CPI continues to exceed expectations, the Federal Reserve may extend the period of maintaining high interest rates, which will put some pressure on silver. However, from a long-term perspective, silver possesses both safe-haven and industrial demand attributes, and the growth of the new energy industry continues to provide important support for silver. Therefore, the current pullback is more of a technical correction at high levels than a reversal of the medium- to long-term trend. In the future, the market will still need to focus on US inflation data, changes in the Middle East situation, and the US dollar's performance, as these factors will continue to determine the direction of silver's next stage.
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