Silver Extends Selloff as US Inflation Meets Forecasts

Silver prices fell further to near $64 per ounce on Wednesday, hitting levels last seen in December 2025, as US inflation data met expectations and the Iran conflict worsened. Headline inflation reached 4.2% in May, the highest since April 2023, driven by rising energy costs linked to the Iran conflict, while the core rate hit a seven-month peak of 2.9%. Traders slightly reduced bets on Federal Reserve rate hikes this year, though a December quarter-point increase remains fully priced in following strong US jobs data last week. Meanwhile, Middle East tensions rose as the US and Iran exchanged fresh strikes, with President Donald Trump warning that Iran will "have to pay the price" for stalling negotiations, threatening a fragile ceasefire and the outlook for a lasting peace deal.

Silver dropped below $65 an ounce on Wednesday, falling to its lowest level since March 23 after the US launched new strikes against Iran following the downing of an American helicopter, driving oil prices higher and fueling inflation concerns. The latest escalation has cast doubt on the durability of a fragile ceasefire and the prospects for a broader peace agreement, while extending the near-complete closure of the Strait of Hormuz. Rising energy costs linked to the conflict have heightened fears of persistent inflation and the possibility of further central bank tightening, weighing on non-yielding precious metals. Meanwhile, investors looked ahead to the release of US inflation figures for fresh clues on the Federal Reserve’s policy path. Stronger-than-expected US employment data also strengthened expectations that the Fed could raise interest rates before the end of the year.

Silver prices tumbled to $66 per ounce on Tuesday, retracing to levels last seen in December 2025, as investors turned their attention to the upcoming US inflation report. The report, due Wednesday, is expected to show inflation climbing to 4.2% in May, its highest in nearly three years, fueled by soaring energy prices. The inflation outlook follows last week’s stronger-than-expected US jobs data, which revealed 172,000 jobs added in May, surpassing forecasts. This has led investors to ramp up bets on Federal Reserve rate hikes this year, with traders now pricing in a 70% chance of a December increase. Meanwhile, signs of a potential Middle East deal emerged after Iran and Israel halted attacks following a US appeal, pushing oil prices lower and temporarily easing inflation concerns, though uncertainty lingers.