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Silver slides for third day as oil surge boosts Fed hike odds
XAG/USD was around $57.6 per troy ounce in Asian trading, as traders re-priced September rate risk after US-Iran Strait of Hormuz shipping moves.
Silver fell for a third straight day, with XAG/USD trading around $57.6 per troy ounce during Asian hours Tuesday, as higher oil prices tied to Middle East tensions fueled concerns about energy driven inflation. FXStreet said the outlook has pushed rate expectations higher, with the CME FedWatch Tool showing a 51% probability of a Fed hike in September versus 23% for rates to stay on hold.
The report linked the inflation and policy shift to renewed US actions affecting shipping through the Strait of Hormuz. It said President Donald Trump reinstated a naval blockade targeting Iranian vessels and customers transiting the waterway, while also announcing other commercial cargo passing through the strait would face a 20% reimbursement fee.
Traders are also looking ahead to two major macro catalysts scheduled for Tuesday, the US June CPI release and Fed Chair Kevin Warshs congressional testimony. FXStreet noted expectations for CPI include a 0.1% month on month decline in headline inflation and a 0.3% increase in core, while market participants plan to scrutinize the testimony for signals on whether the Fed will validate a more hawkish path.
FXStreet added that silver, a non yielding asset priced in dollars, tends to face pressure when the US dollar strengthens and can rise when the dollar weakens. The outlet said investors may also use silver as a store of value or diversification tool during periods of inflation.
Latest closeSilver $58.01 ▼3.0%