Silver Holds Gains as Dollar Weakens

Silver fell toward $58 an ounce on Friday, snapping a two-session winning streak, but was still on track to end July little changed after a more than 20% decline in June. The precious metal found support this week after the US Federal Reserve left interest rates unchanged despite mounting inflationary pressures stemming from renewed hostilities in the Middle East. However, expectations for tighter monetary policy continued to cap gains, with markets currently pricing in about a 63% chance of a Fed rate hike in September. Meanwhile, the US military launched fresh strikes on Iranian targets in retaliation for Tehran’s attacks on US assets across the Middle East, reducing the likelihood of any near-term diplomatic agreement. Precious metals have come under constant pressure since the US-Iran war erupted in late February, as surging oil prices fueled inflation concerns and strengthened expectations for tighter monetary policy.

Silver traded around $59 an ounce on Friday after rising for two straight sessions, supported by a sharp decline in the US dollar as Japan is suspected to have intervened in the currency market once again to strengthen the yen. The precious metal also drew support this week after the Federal Reserve left interest rates unchanged despite mounting inflationary pressures stemming from renewed hostilities in the Middle East. However, expectations for tighter monetary policy continued to limit further gains, with markets currently pricing in about a 63% chance of a Fed rate hike in September. Meanwhile, the US military launched fresh strikes on Iranian targets in retaliation for Tehran’s attacks on US assets across the Middle East, reducing the likelihood of any near-term diplomatic agreement. Silver is also on track to end the month with a small gain after tumbling more than 20% in June.

Silver climbed above $58 per ounce on Thursday, supported by a weaker US dollar as investors assessed the Federal Reserve's decision to keep interest rates unchanged and monitored escalating tensions in the Middle East. The Fed left its benchmark rate at 3.50%-3.75%, while Chair Kevin Warsh reiterated the central bank's commitment to bringing inflation under control. Meanwhile, the US military said it struck dozens of IRGC targets in Iran after Tehran launched ballistic missiles at US troops in Jordan, heightening concerns that a broader conflict could reignite inflationary pressures. Markets are pricing in roughly a 60% chance of a Fed rate hike in September. Higher interest rates typically weigh on non-yielding precious metals such as silver by increasing the opportunity cost of holding them.