XAG/USD falls to a six-month low on expectations of prolonged Fed tightening and a stronger USD.
Silver (XAG/USD) slid to $60.74, its lowest level in over six months, as traders priced in an 86% chance of a Federal Reserve rate hike this year. The shift follows rising inflationary pressures linked to geopolitical tensions, reversing earlier bets on rate cuts.
Prior to the Middle East conflict, markets had anticipated two Fed rate cuts in 2024. Higher interest rates weigh on non-yielding assets like silver, while a stronger USD—tracked by the DXY index at 101.50—further pressures prices.
Investors now await May’s core PCE inflation data, the Fed’s preferred gauge, expected at 3.4% YoY, up from April’s 3.3%.