Silver price (XAG/USD) recovers to near $73.50 during the European trading session on Thursday from its fresh four-week low of $71.79 posted earlier in the day.
The recovery move in the Silver price appears to be short-lived, as it lacks fundamental backing
Renewed Middle East tensions and growing Federal Reserve (Fed) concerns towards rising inflationary pressures are expected to remain major headwinds for the Silver price. The Middle East crisis has re-escalated, following the exchange of attacks between the United States (US) and Iran. Meanwhile, a spokesperson from the Iranian Foreign Ministry has stated that Tehran condemns strikes near the Strait of Hormuz, a critical passage to almost 20% of global energy supply.
Theoretically, renewed geopolitical tensions improve the safe-haven demand of precious metals, such as Silver; however, it has been underperforming as higher oil prices due to restricted energy flows have forced traders to price out dovish Federal Reserve (Fed) bets. The scenario of vanishing dovish Fed prospects bodes poorly for non-yielding assets, such as Silver. According to the CME FedWatch tool, the odds of the Fed holding interest rates at their current levels this year are 43.1%, while the rest favor at least one interest rate hike this year.