Silver (XAG/USD) traded slightly lower on Friday, hovering around $59.90, marking a modest decline of 0.08% for the day [1]. The precious metal struggled to extend its rebound despite renewed tensions in the Middle East, which have fueled concerns about persistent inflation and reinforced expectations that the Federal Reserve (Fed) could raise interest rates [1]. The resumption of hostilities between the United States and Iran has revived concerns over energy supplies, leading to higher oil prices and strengthening expectations of ongoing inflationary pressures [1]. This environment has kept market expectations for monetary tightening alive, weighing on non-yielding assets such as silver [1].
According to the CME FedWatch tool, markets are now pricing in a high chance of at least one interest rate hike before the end of the year [1]. This outlook has also supported the US Dollar, whose rebound is limiting the appeal of USD-denominated precious metals like silver [1]. Investors are closely monitoring diplomatic developments between Washington and Tehran, with media reports indicating that technical talks are continuing despite military clashes, raising hopes for a potential de-escalation that could ease tensions in energy markets [1].
Looking ahead, market participants are focused on the upcoming release of the US Consumer Price Index (CPI) on Tuesday, which could shape expectations for the Fed's interest rate path and serve as the next major catalyst for silver prices [1].
CONCLUSION
Silver prices edged lower as expectations for a Fed rate hike and a stronger US Dollar outweighed safe-haven demand from Middle East tensions. The upcoming US CPI report is expected to be a key driver for silver's next move, with investors watching both inflation data and geopolitical developments closely.