Silver tumbles 6.5% as US inflation resurgence rattles markets

Silver prices tumbled more than 6.5% to $77.8 per ounce on Friday, marking a second consecutive session of losses as selling pressure intensified across precious metals markets amid renewed inflation concerns. Gold also declined sharply, with spot prices falling approximately 1.8% to $4,568.70 per ounce by early trading — heading for a weekly decline as rising US Treasury yields and a stronger dollar weighed on non-yielding assets.

Inflation data fuels selloff

The broad-based retreat followed US inflation figures released earlier in the week that showed consumer prices accelerating to 3.8% annually in April, up from 3.3% the previous month, according to the Bureau of Labor Statistics. The energy index surged 17.9% over the same period, driven largely by the ongoing war in Iran and the closure of the Strait of Hormuz — disruptions that have pushed global energy and transportation costs markedly higher. Wholesale inflation also strengthened, with the Producer Price Index for final demand rising 1.4% in April, marking the largest monthly gain since 2022, while producer prices jumped 6% year-over-year.

Rate outlook shifts

Markets have now fully priced out the possibility of a Federal Reserve rate cut this year, with some investors positioning for a potential hike by December as policymakers confront renewed inflation risks. Higher interest-rate expectations tend to pressure precious metals by increasing the opportunity cost of holding non-yielding assets while simultaneously supporting the dollar. Despite Friday's sharp pullback, silver had outperformed other precious metals earlier in the week on expectations of stronger industrial demand from electronics and solar panel manufacturers.