Silver clawed back above $58 in Asian trading on Thursday after three straight days of losses, but the metal stayed exposed as traders weighed renewed US-Iran tensions and a Federal Reserve leaning against rate cuts. Higher energy costs and firmer inflation risks left the metal vulnerable to a further drop.
Silver rebounded on Thursday, with XAG/USD hovering near $58.30 per troy ounce in Asian trading after three consecutive days of declines. The bounce was modest, and the non-yielding metal remained vulnerable as markets assessed the risk of a further drop amid concerns over inflation and interest rates.
Traders focused on the chance that silver could face more downside if inflation pressures build. Rising geopolitical tensions and the potential for higher energy costs have reinforced expectations that the Federal Reserve may need to hold rates high for an extended period to restrain price growth.
US-Iran friction revives inflation fears
Renewed frictions between the United States and Iran pushed energy and inflation risks back into focus. According to the report, US President Donald Trump said on Wednesday that an interim agreement to end the conflict with Iran was “over”, a shift that intensified worries a return to hostilities could feed inflation and push rates higher.
Trump also threatened a second day of airstrikes and vowed to reimpose a naval blockade after recent attacks on oil tankers in the Strait of Hormuz. Markets read these developments as possible triggers for higher energy prices, which could spill into broader inflation and complicate the Fed’s policy path.
Fed minutes show a divided committee
Minutes from the Federal Reserve’s June 16-17 meeting, released on Wednesday, showed officials were not unified on the rate path. Some policymakers saw a case for raising rates but ultimately backed keeping the benchmark unchanged at 3.6%. The account underscored that inflation concerns were becoming more prominent even as worries over the labor market eased.
Swap traders adjusted accordingly. The probability of a rate increase at the next meeting climbed to more than 30%, up from under 20% the previous Thursday, based on the CME FedWatch tool.
Technical picture stays corrective
The intraday move fit a corrective pattern. Silver futures fell to a low near $57.55 before buyers lifted prices back toward $58.78 into the close, according to VC PMI analysis. That analysis flags a daily mean price of $61.26 as the level silver must reclaim to shift momentum back to buyers. That analysis also holds that the longer-term bullish trend remains intact unless prices close decisively below the weekly buy level at $54.20.
Because silver trades in US dollars, moves in the greenback remain a key driver, and traders looking to trade silver continue to watch both the Dollar and Fed guidance. For now, the metal holds above near-term support.
Sources: TradingPedia, Investing.com
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