Renewed US-Iran tensions lift energy costs, stoking inflation concerns and pressuring non-yielding assets like silver.
Silver (XAG/USD) fell 1.33% to near $58.00 in European trading Thursday, driven by rising inflation expectations tied to escalating US-Iran hostilities. Higher energy prices threaten to de-anchor inflation projections, prompting markets to price in prolonged tight monetary policy, which hurts non-yielding assets.
Recent US inflation data showed cooling price pressures, with June CPI and PPI reports easing significantly. This led traders to reduce bets on a Federal Reserve rate hike later this month, with odds dropping to 10.2% from 31% a week ago, according to the CME FedWatch tool.
Technically, XAG/USD remains bearish, trading below its 20-period EMA at $60.75. The metal’s near-term outlook stays weak as geopolitical risks persist, with US threats to expand strikes on Iranian infrastructure if negotiations fail.