Spot silver prices fell below $59 to $58.83 per ounce during the European session on Thursday (October 8), after encountering resistance near $60.60 per ounce earlier in the day. The escalating tensions in the Middle East were a direct driver of the deteriorating market sentiment. Reports of a new round of attacks on Saudi airports by Iranian-backed Houthi rebels pushed Brent crude oil prices above $103, a daily increase of approximately 3%.

Silver fell below $59, hitting a two-month low.

Silver failed to hold the $60 mark, briefly falling below $59.00 per ounce to a two-month low. Spot silver reversed its gains and fell as market sentiment deteriorated and escalating tensions in the Middle East pushed up oil prices. Precious metals struggled amid rising oil prices and high US Treasury yields. The decline in silver reflects a shift in market demand for safe-haven assets towards the US dollar rather than precious metals, as high US Treasury yields increased the opportunity cost of holding non-interest-bearing assets.

Rising oil prices pushed up global yields, with the 10-year US Treasury yield remaining above 5.30%.

Rising oil prices also pushed up global yields as markets hoped higher energy prices would force major central banks to further tighten monetary policy. The US 10-year yield remained above 5.30%, despite a strong auction on Wednesday, and the 30-year Treasury yield paid above 5.7%, slightly below a 24-year high—a level consistent with weak speculative demand for precious metals. High yields increased the opportunity cost of holding non-interest-bearing precious metals, suppressing silver prices. Rising oil prices pushed up yields through inflation, further diminishing the attractiveness of precious metals.

Geopolitical tensions have driven up oil prices and shipping costs, supporting the safe-haven dollar.

Reports of a new round of attacks on Saudi airports by Iranian-backed Houthi rebels pushed Brent crude oil prices up to around $103 per barrel, a daily increase of about 3%. Concerns about further escalation of regional hostilities also increased shipping costs, collectively worsening market sentiment and providing new impetus for the safe-haven dollar. Geopolitical tensions, by pushing up oil prices and shipping costs, worsened market sentiment, causing safe-haven funds to flow into the dollar rather than precious metals, further suppressing silver prices.

Summarize

Silver fell to $59.30 in European trading on Thursday, after attempting a rebound in Asian trading but failing to hold above $60. Escalating tensions in the Middle East pushed oil prices to around $103 per barrel, pushing up global yields. The 10-year US Treasury yield remained above 5.30%, and the 30-year yield was above 5.7%. High yields increase the opportunity cost of holding non-interest-bearing precious metals, putting downward pressure on silver. Worsening geopolitical tensions worsened market sentiment, with safe-haven funds flowing to the US dollar rather than precious metals. Future developments will depend on oil price movements, US Treasury yields, the evolution of the Middle East situation, the US dollar's performance, and expectations regarding Federal Reserve policy. If oil prices continue to rise and yields remain high, silver may decline further; if geopolitical tensions ease or yields fall, silver may find some respite. Given the coexistence of high yields and geopolitical tensions, silver still faces downward pressure in the short term. (Spot silver daily chart, source: EasyTrade) At 15:19 Beijing time, spot silver was trading at $59.09 per ounce.