The silver market experienced a volatile session on August 14, with prices initially rising before sharply declining. During Thursday night trading, the main silver futures contract in Shanghai opened higher, surging to near the 16,000 point mark. However, sentiment reversed dramatically by Friday morning, as spot silver broke below $64 per ounce and the main Shanghai silver contract rapidly expanded its losses to over 2%, falling below 15,500 yuan per kilogram. The entire precious metals sector faced pressure during the day.

Looking at the underlying logic, after the US July CPI data cooled on Wednesday, market expectations for a September rate hike by the Federal Reserve have significantly diminished. Thursday evening’s release of the US July PPI data further confirmed this trend: the annual PPI rate came in at 4.7%, below the expected 4.9% and the previous month's 5.5%; the core PPI annual rate was 4.2%, an improvement from the previous 4.7%. The consecutive cooling of inflation lowered market expectations for a Fed rate hike in September. The US Dollar Index and Treasury yields fell in tandem, providing a strong boost to precious metals in overnight trading.

However, just after the PPI data was released and before the close of US stocks on Thursday, the US Treasury conducted a $25 billion auction of 30-year bonds. The outcome became a critical factor that overwhelmed the bullish momentum in precious metals. The high yield was 5.216%, the highest level since 2001, marking a 15.8 basis point increase from last month's 5.058%. This result sent a clear signal to the market: demand for long-term US Treasuries is weakening, with investors demanding increasingly higher risk premiums. Despite cooling inflation data and falling rate hike expectations, long-term yields remain elevated. The spread between 30-year and 5-year Treasury yields has widened to nearly 90 basis points, the largest since May. The upward pressure on long-term interest rates is no longer solely driven by Fed policy expectations but is rather a combination of fiscal deficits, Treasury supply pressures, and inflation risks, which suppress non-yielding assets like gold and silver.

Additionally, the retreat in silver prices was also linked to hawkish comments from several Fed officials and a sudden surge in expectations for a rate hike in Japan, leading to a rapid price decline in the morning session. Looking ahead, after the morning sell-off, silver found support in the afternoon session, suggesting that the tug-of-war between bulls and bears is likely to continue. Market attention will now shift to the US July retail sales data, July PCE figures, and the guidance from Federal Reserve Chair Powell's speech at the late August Jackson Hole Global Central Banking Symposium. It is worth noting that if the trend of weak demand for long-term US Treasuries persists, it could continue to cap the upside potential for precious metals.