XAG/USD declines 1.85% amid rising energy costs and expectations of prolonged tight monetary policy.
Silver prices slid 1.85% to near $56.70 on Thursday as surging oil prices reignited inflation fears. Escalating US-Iran tensions and disruptions in Iraqi crude exports drove energy costs higher, fueling concerns that inflation may remain above central bank targets for longer.
Investors anticipate extended tight monetary conditions, weighing on non-yielding assets like silver. Recent US inflation data showed moderation, with June CPI and PPI reports easing price pressures, reducing bets on a July Fed rate hike to around 10%.
The CME FedWatch tool indicated a drop in hawkish expectations from over 30% a week ago. While geopolitical risks support oil, softer inflation data may limit further silver declines.