Silver Retreats after Record Rally

Silver declined toward $84 per ounce on Thursday, extending losses from the previous session as inflation concerns dimmed prospects for interest rate cuts. Oil resumed its rally after coordinated releases from strategic reserves failed to ease markets, keeping energy-driven inflation risks elevated. These pressures have overshadowed the heightened demand for safe-haven assets amid the Iran conflict. Meanwhile, US inflation in February met expectations, showing steady but above-target CPI readings, while forward-looking inflationary pressures have further lowered the likelihood of a Federal Reserve rate cut. This has strengthened the dollar and pushed Treasury yields higher, adding more pressure on non-yielding metals. The Fed is widely expected to hold rates next week, with traders pricing in only one cut this year. Despite the decline, silver remains up more than 18% so far this year.

Silver extended its decline to fall below $86 per ounce on Wednesday as investors evaluated escalating tensions in the Middle East alongside fresh US inflation data and their implications for the policy outlook of the Federal Reserve. The US-Israeli campaign against Iran entered its 12th day, with the Pentagon reporting its most intense strikes of the conflict and pledging to continue operations until the Islamic Republic is defeated. This stance contrasted with comments from President Trump suggesting the conflict could end sooner than expected. The war has effectively shut the Strait of Hormuz, pushing oil prices higher and reviving concerns about global inflation, which has led markets to scale back expectations for interest rate cuts from major central banks. Meanwhile, US inflation held steady at 2.4% in February, before the Iran war began. The Fed is widely expected to keep rates steady next week, with traders anticipating only one 25bp cut this year, potentially in September.

Silver fell below $88 per ounce on Wednesday after rising for three consecutive sessions, paring recent gains as investors reacted to the latest developments in the Middle East. The US-Israeli campaign against Iran entered its 12th day, with the Pentagon reporting its most intense strikes yet and vowing to continue operations until the Islamic Republic is defeated. This contrasted with President Donald Trump’s suggestion that the conflict could end soon. Meanwhile, oil prices were capped by reports that the IEA proposed the largest release of oil reserves in its history to help stabilize markets. Nonetheless, major Middle Eastern producers have sharply cut output as the Strait of Hormuz remains effectively closed. Investors now turn to a key US inflation reading that could shed light on recent price trends, though it is not yet expected to reflect the impact of the Iran war.