Silver Steadies as Traders Weigh Fed Outlook

Silver steadied near $58 an ounce on Thursday after facing heightened volatility earlier in the week, as investors assessed the Federal Reserve's policy outlook following softer US inflation data and escalating conflict in the Middle East. Data released on Wednesday showed US producer prices unexpectedly fell in June for the first time in nearly a year, driven by lower energy costs, while core PPI rose a softer-than-expected 0.2%. The report followed Tuesday’s weaker consumer inflation data, reducing concerns that the Fed would soon raise interest rates. Markets also scaled back expectations for a Fed rate hike in September, with the implied probability falling to around 44% from 50% a day earlier. Still, June’s inflation data did not capture the impact of the latest escalation in hostilities between the US and Iran, as the interim peace agreement reached last month has effectively unraveled.

Silver hovered around $58.50 per ounce on Wednesday, trimming earlier losses but remaining near its weakest level since December 2025 as investors balanced softer-than-expected US inflation data against escalating Middle East tensions. US producer prices unexpectedly fell in June for the first time in nearly a year, driven by lower energy costs, while core PPI rose just 0.2%, below forecasts. The report followed weaker-than-expected consumer inflation data released on Tuesday, prompting markets to pare expectations for further Federal Reserve tightening. Still, traders continue to price in about a 49% chance of a September Fed rate hike as oil prices climbed to a one-month high after the US continued strikes on Iran, reimposed a naval blockade of Iranian ports, and Tehran closed the Strait of Hormuz. Fed Chair Kevin Warsh also reiterated on Tuesday that the central bank has "no tolerance" for persistently elevated inflation.

Silver fell toward $58 an ounce on Wednesday, trimming gains from the previous session as escalating tensions in the Middle East kept inflation and interest rate concerns at the forefront of investors' minds. The US launched another round of strikes against Iran while reinstating its naval blockade of Iranian ports near the Strait of Hormuz, raising fears of further disruptions to global energy supplies. Gold had surged more than 1% on Tuesday after softer-than-expected US inflation data prompted traders to scale back expectations for near-term Federal Reserve interest rate hikes. Meanwhile, Fed Chair Kevin Warsh reiterated the central bank’s commitment to restoring price stability during congressional testimony but stopped short of signaling a more hawkish policy stance. Even so, markets continue to price in roughly a 50% chance of a Fed rate hike in September..