Silver Holds, Middle East Geopolitics and US Inflation in Focus
Silver prices held above US$88 per ounce on Wednesday (March 11) after strengthening for three consecutive sessions, supported by increased demand for hedge assets amid the still highly volatile Middle East conflict. Market sentiment remains sensitive to geopolitical headlines, making the precious metal more defensive than riskier assets.
The US-Israel campaign against Iran entered its 12th day. The Pentagon reported the most intense attacks to date and asserted that operations would continue until the Islamic Republic was defeated, contrasting with US President Donald Trump's previous statement that the conflict could end soon. This difference in tone widened uncertainty and maintained interest in safe-haven assets.
In energy markets, oil prices were held back by reports that the IEA proposed releasing the largest oil reserves in history to help stabilize the market. However, supply pressures persisted as major Middle Eastern producers sharply cut production following the closure of the Strait of Hormuz, keeping the energy risk premium relevant to the inflation narrative.
The primary transmission channel to silver comes from a combination of two factors: geopolitics, which increases hedging demand, and energy dynamics, which can influence inflation expectations and the direction of interest rates. When markets perceive inflation as potentially more "sticky," yields and the dollar can act as counterweights, limiting the metal's upside, so silver's movements tend to be determined by the trade-off between risk premium and interest rate pricing.
Next, investor attention turns to the release of US inflation data, which is crucial for interpreting the latest price trend. Markets believe the data likely doesn't fully capture the impact of the Iran war, but it remains crucial as a signal of whether core price pressures are easing or maintaining the narrative of higher interest rates for longer. (alg)
Source: Newsmaker.id
