XAG/USD falls 0.6% after US inflation data reduces July Fed rate hike probability to 16.6% from 41.7%.
Silver (XAG/USD) declined 0.6% to near $58.00 in European trading Wednesday, reversing early gains despite softer US inflation data. The June Consumer Price Index showed headline inflation slowing to 3.5% year-on-year, while core inflation dropped to 2.6%, reducing expectations for a Federal Reserve rate hike this month.
The CME FedWatch tool now assigns a 16.6% chance of a July rate increase, down from 41.7% on Monday. Lower rates typically support non-yielding assets like silver, but rising oil prices due to US-Iran tensions may limit further upside by sustaining inflation pressures.
Investors await the US Producer Price Index for June, due at 12:30 GMT, for further clues on inflation trends and Fed policy.