The iShares Silver Trust (SLV) experienced a sharp intraday decline of 5% on Friday, significantly underperforming the broader market. The sell-off in the silver-backed ETF coincided with a negative reaction across major equity indices in pre-market trading following the release of a stronger-than-expected U.S. jobs report.

The primary catalyst for the drop appears to be the May Non-Farm Payrolls data, which showed the U.S. economy added 172,000 jobs, far exceeding forecasts. This robust data has reinforced market expectations that the Federal Reserve may maintain higher interest rates for longer, or even consider a rate hike. As a non-yielding asset, silver becomes less attractive when interest rates rise, as the opportunity cost of holding it increases. Furthermore, analysts have recently revised silver price forecasts downward, citing weaker industrial demand and persistent headwinds from monetary policy expectations.

Market analysis indicates that precious metals like silver are caught in a crosscurrent where geopolitical tensions that typically boost safe-haven demand are being offset by the inflationary pressures they create, which in turn bolster the case for tighter monetary policy. The resulting strength in the U.S. dollar and bond yields has placed sustained downward pressure on silver prices in the current session.