Silver slipped for a second straight session, trading near $57.00 per troy ounce on Thursday, as rising US-Iran tensions in the Strait of Hormuz lifted oil prices and revived inflation worries. The pressure held even after softer June US inflation data trimmed the odds of a September Fed rate hike to about 44%.
Silver keeps falling. The metal traded near $57.00 per troy ounce during Asian hours on Thursday, a second consecutive session of declines, as escalating tensions between the United States and Iran in the Strait of Hormuz drove oil prices higher. The non-yielding metal came under pressure because those developments could extend the Federal Reserve's stretch of elevated interest rates.
Strait of Hormuz strikes stoke inflation fears
US Central Command launched another round of strikes to keep the critical shipping lane open. CENTCOM confirmed that US aircraft fired missiles into an oil tanker's smokestack, disabling the vessel and adding to market uncertainty. Asked whether Iran faces a firm deadline before the US targets domestic infrastructure such as bridges, President Donald Trump told reporters he "does not like giving deadlines."
Higher oil prices feed directly into inflation expectations, and that is what unsettled precious-metal traders. Silver typically benefits from lower rates, so any hint that the Fed will keep policy tight for longer weighs on it.
Softer inflation data offers only brief relief
The move lower came despite a run of weaker US inflation readings. On Tuesday, the Consumer Price Index dropped to 3.5% in June from a three-year high of 4.2% in May, undershooting the 3.8% forecast. The following day, the Producer Price Index declined to 5.5% year-over-year from 6% in May, below the 6.2% markets had anticipated.
On a monthly basis, PPI fell 0.3%, reversing May's 0.6% increase. In response, markets dialed back the odds of a September hike to around 44%, down from 50% the previous day.
That relief may prove temporary. The recent breakdown of last month's interim peace agreement means June's data does not yet capture the economic effects of the latest US-Iran escalation, leaving a key source of uncertainty for silver and broader risk sentiment.
Source: TradingPedia
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