Silver recovered toward $58 on Tuesday ahead of the US June CPI release, clawing back from below $57.00 earlier in the day. Traders are weighing a hawkish Fed tilt and rising oil prices tied to US-Iran tensions, both of which cap the metal's upside.
Silver climbed 0.75% to near $58 during Tuesday's European session, holding a recovery from below $57.00 seen earlier in the day. Investors are waiting on the United States Consumer Price Index for June, which publishes at 12:30 GMT.
The inflation print carries extra weight because the June FOMC minutes, released last week, showed policymakers view high inflation as a "dominant risk", according to FXStreet. On Monday, Fed Governor Christopher Waller said another hot inflation figure would be a "signal", not noise, about the need to tighten monetary conditions further.
What the CPI numbers could show
Estimates cited by FXStreet put headline CPI growth at 3.8% year-on-year in June, cooling from 4.2% in May, with core figures rising steadily at 2.9%. Signs of accelerating price pressure would boost hawkish Fed rate expectations, a scenario that bodes poorly for a non-yielding asset like silver.
Money markets have already shifted. The CME FedWatch Tool now reflects a 51% probability of a rate increase in September, against a 23% chance rates stay on hold, TradingPedia reported.
Oil and the Strait of Hormuz cap the upside
Investors will also track Fed Chair Kevin Warsh's first testimony before the US House Financial Services Committee later on Tuesday. On the geopolitical front, surging oil prices from escalating US-Iran aggression and Washington's claim for a toll fee on ships passing through the Strait of Hormuz would limit silver's upside.
Sources: FXStreet, TradingPedia
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