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Silver eases as energy disruption concerns support higher-rate fears
XAG/USD is trading near $63.8, while CME FedWatch shows odds of the Fed holding rates steady in September have risen to about 65%.
Silver prices are drifting lower, with XAG/USD down roughly 1% to around $63.80 in Asian trading on Friday, extending a broader correction.
FXStreet links the pressure on silver to worries about global energy supply disruptions tied to the blockade affecting the Strait of Hormuz and the Bab al-Mandab Strait, which it says account for nearly 27% of global energy supply.
With minimal traffic keeping oil prices higher, the newsletter notes that the setup can lift inflation expectations and raise concern that central banks may pursue interest rate hikes, a headwind for non-yielding assets like silver.
FXStreet also points to rate expectations as a partial offset, saying odds of the Federal Reserve holding policy rates steady at the September meeting have increased to nearly 65% on the CME FedWatch tool, up from about 75% a month ago, while WTI is around $80.45 and flat.
Latest closeSilver $64.53 ▼1.6%|WTI crude $81.19 ▼2.5%