XAG/USD drops 3.5% after Minneapolis Fed President Kashkari signals persistent inflation concerns over labor market weakness.
Silver prices fell sharply to near $74.10, down 3.5% in European trading, as Federal Reserve officials prioritize combating inflation over labor market conditions. Minneapolis Fed President Neel Kashkari warned that recent data shows higher inflationary risks, shifting focus away from rate cuts.
US headline inflation hit 3.8% in April, the highest in nearly three years, driven by rising energy costs linked to Middle East tensions. The CME FedWatch tool now shows a 52.3% chance of steady rates this year, with some traders pricing in a potential hike, reversing earlier expectations of cuts.
Hawkish Fed bets weigh on non-yielding assets like silver, which struggles under the prospect of prolonged high interest rates.