Silver Under Pressure as Inflation and Interest Rate Risks Strengthen
Silver prices moved below $75/oz on Wednesday after plunging more than 5% in the previous session. The decline occurred as escalating US-Iran tensions refocused the market on inflation risks and the likelihood of interest rates remaining high.
The main trigger came from US President Donald Trump's statement that the US could resume attacks on Iran in "two or three days" if Tehran did not accept Washington's peace terms. The statement came shortly after Trump said he had canceled a planned attack, while the issue of Iran's nuclear program remained a stumbling block in negotiations.
The protracted conflict is said to have contributed to keeping the Strait of Hormuz effectively closed to shipping traffic, pushing oil prices higher and intensifying inflationary pressures. Rising inflation has led the market to perceive the risk of central banks keeping interest rates higher, a situation that generally puts pressure on precious metals because they do not provide interest yields.
Silver also gave up gains made earlier in the month, when sentiment in AI-themed stocks improved and there was optimism about demand for the metal for data center infrastructure. As the narrative shifts from "growth-AI" to "inflation-interest rates," risk appetite declines, and pressure on silver increases.
Going forward, silver's direction will be largely determined by whether geopolitical tensions trigger further oil price increases and reinforce expectations of higher interest rates. The market will monitor developments in the US-Iran conflict, conditions in the Strait of Hormuz, the direction of oil prices, and changes in central bank policy expectations, which are the main drivers of volatility in precious metals. (Asd)
Source: Newsmaker.id
