Silver Slides on Stronger Dollar, Fed Rate Uncertainty

Silver prices fell about 2% to around $57 an ounce on Tuesday, pressured by a stronger US dollar and investor caution ahead of Wednesday's Federal Reserve policy decision. The dollar remained near a four-week high as markets priced in more than a one-third chance of a rate hike, an unusually high level of uncertainty this close to a Fed meeting despite President Donald Trump's repeated calls for lower interest rates. Investors also continue to assign roughly an 80% probability to a rate increase in September, reinforcing expectations that US borrowing costs could stay elevated. Meanwhile, optimism over a potential easing of tensions between the US and Iran reduced demand for safe-haven assets. On Monday, Trump said Washington was engaged in "good talks" with Iran and that a deal to resolve the conflict was possible, while warning that military strikes could resume if negotiations break down.

Silver fell toward $57 an ounce on Tuesday, remaining under pressure amid lingering concerns that the Federal Reserve could raise interest rates this week. Markets are currently pricing in an over one-third chance of a Fed rate increase on Wednesday, an unusually high level of uncertainty this close to a Fed meeting compared with recent years. Citadel Securities also said it expects the Fed to raise rates this week to reinforce Chairman Kevin Warsh’s credibility in fighting inflation after the central bank chief repeatedly pledged to restore price stability. Silver also came under pressure even after President Donald Trump said the US was engaged in "good talks" with Iran to end the Middle East conflict, pushing oil prices lower and easing concerns over inflation and interest rate hikes. However, Trump warned that the US is prepared to resume strikes against the Islamic Republic if negotiations fail.

Silver steadied above $58 an ounce on Tuesday after a volatile start to the week, as President Donald Trump said the US was engaged in "good talks" with Iran to end the Middle East conflict, sending oil prices lower and easing concerns over inflation and interest rate hikes. However, Trump also warned that the US is ready to resume strikes against the Islamic Republic if negotiations break down. The US suspended its attacks on Iran late Friday following nearly two weeks of hostilities, while Tehran also halted retaliatory strikes against US bases in neighboring countries. Investors are also awaiting the Federal Reserve’s policy decision this week, with policymakers widely expected to leave interest rates unchanged. While some traders continue to speculate about a possible rate hike this week amid renewed inflationary pressures, most expect the next increase to come in September.