Silver Pressured by Hawkish Fed Remarks

Silver traded just below $66 an ounce on Tuesday, remaining under pressure as hawkish comments from Federal Reserve officials boosted expectations for further US interest rate hikes. On Monday, Chicago Fed President Austan Goolsbee said the central bank must account for persistent supply shocks, while St. Louis Fed President Alberto Musalem said additional increases may be needed to bring inflation toward the Fed’s target. Investors now await speeches from Fed officials John Williams and Tom Barkin later today. Meanwhile, falling oil prices offered some support for silver amid increased diplomatic efforts to end the Middle East conflict and signs of continued energy flows from the region. President Trump is due to address the UN General Assembly in New York later today and may meet Iranian President Pezeshkian on the sidelines.

Silver strengthened above $66 an ounce on Tuesday, resuming its advance as falling oil prices eased inflation concerns and expectations for further interest rate hikes. Oil prices declined for four straight sessions amid increased diplomatic efforts to end the Middle East conflict and signs of continued energy flows from the region. President Donald Trump is scheduled to address the UN General Assembly in New York later today and may meet with Iranian President Masoud Pezeshkian on the sidelines. Lower oil prices help ease inflationary pressures, reducing expectations for additional rate hikes by the Federal Reserve. Meanwhile, Chicago Fed President Austan Goolsbee said the central bank cannot overlook repeated and persistent supply shocks, while St. Louis Fed President Alberto Musalem said further rate increases may be necessary to achieve the Fed’s inflation goal. Investors now await speeches from Fed officials John Williams and Tom Barkin later today.

Silver climbed to $66.6 on Monday, its highest level since September 10, despite a stronger US dollar as investors continued to monitor developments in the Middle East. Oil prices extended their decline at the start of the week, easing concerns over prolonged inflationary pressures as markets looked for signs of diplomatic progress on the Iran conflict around this week’s UN meetings. However, tensions remained elevated as Iran and the US exchanged fresh threats on Sunday. Meanwhile, traders are pricing an 88% probability of a US rate increase by December, according to the CME FedWatch Tool. Last week, both the Federal Reserve and Bank of Japan raised interest rates and signaled further tightening, following a similar move by the ECB earlier this month.