Silver Drops to Eight-Month Low on Rate Hike Fears

Silver plunged more than 3% to below $56 an ounce on Thursday, hitting its lowest level since November 2025, as escalating Middle East tensions drove oil prices higher and strengthened expectations that US interest rates will remain elevated. The latest escalation followed fresh US strikes on Iranian military targets and Tehran's retaliation against US bases in neighboring countries, raising concerns over the security of the Strait of Hormuz and lifting crude oil prices to one-month highs. Higher energy prices have reinforced expectations that the Federal Reserve will keep monetary policy tighter for longer, weighing on precious metals. Traders currently see about a 51% chance of a September rate hike, while softer-than-expected US inflation data has made a July increase unlikely, despite Fed Chair Kevin Warsh's commitment to bringing inflation under control.

Silver decreased to 55.56 USD/t.oz, the lowest since November 2025. Over the past 4 weeks, Silver lost 18.11%, and in the last 12 months, it increased 45.73%.

Silver fell toward $57 an ounce on Thursday, extending its decline as escalating attacks in the Middle East pushed oil prices sharply higher this week, reviving concerns about inflation and the outlook for interest rates. The US carried out additional strikes against Iranian targets on Wednesday, though President Donald Trump said Tehran had signaled a willingness to resume negotiations. Meanwhile, the precious metal found some support from softer US inflation data, which eased concerns over a near-term Federal Reserve rate hike. Data released on Wednesday showed US producer prices unexpectedly declined in June for the first time in nearly a year, largely due to lower energy costs, following Tuesday’s weaker-than-expected consumer inflation report. However, June’s inflation figures did not reflect the impact of the latest escalation in the US-Iran conflict, as the interim peace agreement reached last month has effectively unraveled.