SILVERRelationship Between Silver, 10-Year Bond Yield, and DXY (US Dollar Index) as of June 2025
1. Silver Price:
Silver has surged past $35 per ounce, approaching $36, marking a 13-year high and a strong rally driven by supply deficits and robust industrial demand, especially from electronics, solar panels, and renewable energy sectors.
US 10-Year Treasury Yield:
The 10-year yield recently rose to around 4.50% to 4.55% (June 6, 2025), up about 12 basis points over a couple of days, reflecting inflation concerns and fiscal uncertainties.
US Dollar Index (DXY):
The DXY has strengthened amid hawkish Fed expectations and safe-haven flows, generally exerting downward pressure on commodities priced in USD, including silver.
2. Correlation and Dynamics
Inverse Correlation with Real Yields:
Silver prices exhibit a strong negative correlation with real interest rates (nominal yields minus inflation expectations). As real yields rise, silver tends to fall due to higher opportunity costs of holding non-yielding assets.
Impact of Rising 10-Year Yields:
The recent increase in the 10-year Treasury yield typically pressures silver prices lower. However, silver’s strong industrial demand and supply deficits have offset this effect, supporting prices despite higher yields.
DXY Influence:
A stronger dollar (higher DXY) makes silver more expensive in other currencies, usually suppressing demand and prices. Yet, silver’s recent rally suggests that supply constraints and investor interest are outweighing the dollar’s negative impact.
3. Fundamental Drivers Behind Silver’s Rally
Supply Deficits:
Silver mine production has declined since 2022, while industrial demand, especially for green technologies, continues to grow, creating persistent deficits.
Reduced Recycling:
Despite higher prices, recycled silver supply has diminished, indicating limited above-ground stocks.
Safe-Haven and Inflation Hedge Demand:
Economic uncertainties, rising government debt, and geopolitical tensions have increased investor interest in silver as a store of value alongside gold.
Gold-to-Silver Ratio:
The ratio remains elevated (~75:1), suggesting silver is undervalued relative to gold and has room to outperform.
4. Technical Outlook
Silver’s breakout above $35 is a key technical milestone, triggering momentum buying and algorithmic trading.
Overbought conditions suggest possible short-term profit-taking or consolidation near
Support levels
Conclusion
Despite rising US 10-year Treasury yields and a stronger US dollar, silver prices have surged due to persistent supply deficits, strong industrial demand, and safe-haven buying amid economic uncertainties. The usual inverse relationship between silver and bond yields/DXY is currently moderated by fundamental supply-demand imbalances and technical momentum. However, silver remains sensitive to real interest rate movements and dollar strength, which could cap gains or trigger corrections in the near term.
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