Silver Slips Amid Middle East Tensions and Fed Policy Uncertainty

Silver declined to $61.2 per ounce on Tuesday as investors assessed rising Middle East hostilities and awaited the Federal Reserve’s June meeting minutes for monetary policy signals. The metal had reached a two-week high on Monday following a softer-than-expected US jobs report, which prompted markets to reduce expectations for near-term interest rate hikes. However, persistent inflation concerns suggest the Fed may maintain a "higher for longer" approach, with traders pricing in a 60% chance of a September rate hike. Meanwhile, oil prices edged higher after two tankers were struck in the Strait of Hormuz, and Iran stated it would halt peace talks unless US President Trump ceased his repeated threats to restart the war.

Silver slipped below $62 an ounce on Tuesday, but held most of last week's gains as investors awaited the minutes of the Federal Reserve’s June meeting for fresh clues on the outlook for interest rates. Data released last week showed US job growth slowed sharply in June, while payroll figures for the previous two months were revised lower, leading markets to scale back expectations of a near-term rate hike. Traders are now pricing in roughly a 50% chance of a Fed rate increase in September, down from about two-thirds before the latest employment report. The metal also drew support from lower oil prices as traffic through the key Strait of Hormuz continued to recover following the implementation of the interim US-Iran peace agreement. Meanwhile, Middle Eastern producers ramped up output and cut prices in response to changing market conditions, while OPEC+ agreed to increase production quotas for next month.

Silver fell more than 1% to below $62 an ounce on Monday, pulling back from two-week highs amid a firmer US dollar. However, losses were contained as signs of a cooling US labor market tempered expectations for a Federal Reserve rate hike. Last week’s data showed a sharp slowdown in US job growth in June, alongside downward revisions for April and May, leading markets to scale back near-term hike bets. At the same time, oil prices edged lower as recovering energy flows through the Strait of Hormuz and the prospect of increased OPEC+ supply fueled concerns about a potential glut. Investors now await the Fed’s meeting minutes, due Wednesday, with markets pricing in over a 50% chance of a September rate increase.