XAG/USD falls over 1% after Fed officials hint at potential rate hikes in coming months, weighing on non-yielding assets.
Silver prices (XAG/USD) declined more than 1% to near $64.50 per troy ounce in Asian trading Tuesday, reversing modest gains from the prior session. The drop follows a hawkish shift in Federal Reserve messaging, with updated projections and comments from Chair Kevin Warsh surprising markets.
The Fed held rates steady at 3.50%-3.75% last week but signaled a more aggressive stance, with futures markets now fully pricing a 25-basis-point hike for September. Some traders even anticipate a move as early as next month. Precious metals, which offer no yield, typically underperform in rising-rate environments.
Downside pressure on silver may be limited by progress in US-Iran peace talks, which eased inflation concerns. Officials reported “great progress” in negotiations, including Iran’s agreement to readmit IAEA inspectors, potentially stabilizing energy markets.