Geopolitical tensions and rising US inflation expectations fuel speculation of prolonged Fed tightening, pressuring silver prices.
Silver (XAG/USD) retreated to $76.10 per troy ounce in Asian trading Friday, reversing two days of gains. The decline follows growing expectations that the Federal Reserve may maintain higher interest rates amid persistent inflation risks tied to elevated energy prices and US-Iran tensions.
Markets had previously priced in potential Fed rate cuts, but policymakers are now signaling openness to further hikes if inflation fails to cool. A stronger US economic outlook and rising core consumer prices are reinforcing the case for tighter monetary policy, which typically weakens demand for non-yielding assets like silver.
Uncertainty over US-Iran negotiations has kept investors cautious, with officials from both sides acknowledging progress but no final deal. The Strait of Hormuz remains a key risk, as disruptions could further lift energy costs and inflation expectations.