Silver Falls on Fed Rate Hold Bets

Silver plunged 5% to $69.5 per ounce on Friday, marking a 14% weekly collapse, as the Middle East conflict drove energy prices higher and crushed hopes for monetary easing. The sell-off accelerated after reports of expanded US military deployment to the region, pushing traders to assign a 50% probability to a Federal Reserve rate hike by October and to price in at least three hikes each from the European Central Bank and Bank of England in 2026. The metal has now declined for three straight weeks since the US-Israel strikes on Iran, weighed down by rising Treasury yields, a resurgent dollar, and investor liquidations to cover losses. Earlier this week, major central banks, including the Fed, ECB, BoE, and Bank of Japan held rates steady but signaled readiness to tighten policy further if inflationary pressures persist.

Silver fell toward $72 per ounce on Friday and was poised for a third consecutive weekly loss, as surging energy prices from the Middle East conflict fueled inflation concerns and reduced expectations for interest rate cuts. Rising energy costs and mounting inflationary pressures prompted investors to shift into the dollar and Treasuries, weighing on safe-haven metals. The shock to energy markets also forced traders to reassess the policy outlook after hawkish signals from major central banks. The Fed kept rates unchanged, signaling that cuts are unlikely until inflation shows clear easing. Meanwhile, the ECB, BOJ, and BOE also left rates steady but struck more hawkish tones, indicating a bias toward tighter policy. Markets have now pushed back Fed easing expectations to 2027 and are pricing in two rate hikes each from the ECB and BOE this year, further dampening precious metals' appeal.

Silver plummeted over 10% toward $65 per ounce on Thursday, its lowest since mid-December, as the precious metals rout deepened amid Iran war-driven volatility and hawkish central bank shifts. Investors recalibrated expectations after the Federal Reserve, European Central Bank, Bank of Japan, and Bank of England all held rates but struck more aggressive tones, warning of inflation risks and economic uncertainty tied to the Iran conflict. US policymakers signaled no rate cuts until inflation clearly eases, with Fed Chair Jerome Powell acknowledging a hike remains possible, though unlikely for now. Markets now push Fed easing to 2027 and price in two ECB and BoE hikes this year, weighing heavily on silver’s outlook.