Silver Hits 6-Month Low
Silver prices weakened to around US$61 per ounce on Wednesday (June 24th), remaining near a six-month low. This pressure arose as the market increasingly considered the possibility of tighter Federal Reserve policy. Although the interim peace agreement between the United States and Iran helped ease concerns about energy inflation, this sentiment was not strong enough to lift silver prices.
The main factor pressuring silver was expectations of a Fed interest rate hike. At its last meeting, the Fed maintained interest rates, but signals from central bank officials indicated growing support for future rate hikes. Fed Chairman Kevin Warsh also reiterated his commitment to restoring price stability, leading the market to interpret the direction of US monetary policy as still hawkish.
This situation is unfavorable for silver because the precious metal does not provide a return like bonds. When interest rates and Treasury yields rise, investors tend to gravitate toward interest-bearing assets. Furthermore, a strengthening US dollar makes silver more expensive for buyers using other currencies, thereby suppressing global demand.
From a geopolitical perspective, progress in negotiations between Washington and Tehran has actually provided positive sentiment for the energy market. Increased shipping traffic through the Strait of Hormuz indicates that the risk of supply disruptions is easing. If energy supplies stabilize, inflationary pressures from oil prices could ease. However, for silver, the impact is mixed, as easing geopolitical risks also reduce demand for safe havens.
Additional pressure comes from a major sell-off in US technology stocks. When technology and semiconductor stocks fall sharply, investors tend to trim positions in various assets, including precious metals, to cover losses in other portfolios. In such situations, silver can also be sold, as it is a liquid and easily converted asset.
Going forward, silver's direction will depend heavily on US inflation data and the movement of the US dollar. If PCE inflation data again shows high price pressures, expectations of a Fed rate hike could strengthen, and silver risks testing the psychological level of US$60. However, if inflation begins to subside and the dollar weakens, silver could attempt a technical rebound to the US$62 to US$63 per ounce area. (arl)
Source: Newsmaker.id
