Silver Climbs to New Record

Silver climbed toward $67 an ounce on Wednesday, recouping losses from the previous session as the weakening dollar made the greenback-priced metal more affordable for buyers using other currencies. The dollar’s weakness was largely driven by the Japanese yen’s sharp appreciation this month, along with cautious investor positioning ahead of several major central bank decisions. The US Federal Reserve, European Central Bank and Bank of Japan are all expected to raise interest rates this month. Investors are also awaiting key US inflation data this week for additional clues on the Fed’s policy outlook. Meanwhile, oil prices continued to advance amid escalating Middle East tensions, increasing inflation concerns and strengthening expectations for rate hikes. While precious metals are traditionally viewed as a hedge against inflation, higher interest rates can weigh on demand for non-yielding assets by making interest-bearing investments more attractive.

Silver traded around $65.5 an ounce on Wednesday after sliding for two straight sessions, pressured by rising oil prices that heightened inflation concerns and strengthened expectations for interest rate hikes. Oil prices continued to climb after US forces destroyed five Iranian crude tankers near Kharg Island, the country’s main oil export hub, in retaliation for attempted missile attacks on a US warship. Investors also braced for key US inflation readings this week for further signals on the Federal Reserve’s next policy move. Markets are currently pricing in roughly a 60% chance of a 25-basis-point rate hike next week. Although precious metals are widely considered a hedge against inflation, higher interest rates can reduce demand for non-yielding assets by increasing the appeal of interest-bearing investments. Meanwhile, silver continued to find support from robust industrial demand, particularly from the solar energy and electrification sectors.

Silver traded cautiously around $66 an ounce on Tuesday as investors weighed expectations of a Federal Reserve rate hike against a weaker dollar ahead of key US inflation data later this week. Rising oil prices also renewed concerns over inflation. Oil extended gains to multi-week highs amid escalating Middle East tensions after Yemen’s Iran-backed Houthis attacked energy facilities and cities in Saudi Arabia, a key US ally. Meanwhile, Friday’s stronger-than-expected jobs report pointed to a strengthening labor market, prompting traders to price in roughly a 60% chance of a Fed rate hike at the September meeting. While silver is traditionally seen as an inflation hedge, higher interest rates tend to reduce the appeal of the non-yielding asset. Investors now await producer price data on Thursday and consumer inflation figures on Friday for further clues on the Fed’s policy outlook.