Silver Edges Higher on Softer Oil Prices

Silver strengthened above $67 an ounce on Wednesday, extending gains from the previous session as oil prices declined for a sixth consecutive session, easing concerns over higher inflation and interest rates. Oil prices continued to fall after President Donald Trump said US officials had a very good meeting with Iranian envoys, while Tehran said it could reopen the Strait of Hormuz within seven days if the US eases military pressure and lifts its blockade of Iranian ports. Reports also indicated that Saudi Arabia plans to restore oil exports through its East-West pipeline in the coming days. Meanwhile, Richmond Fed President Tom Barkin warned on Tuesday that inflationary shocks could take time to fade, with a risk that elevated price pressures could become entrenched. Last week, the Fed delivered its first rate hike in three years, while signaling further tightening to contain inflation.

Silver fell below $66 an ounce on Tuesday, remaining under pressure as hawkish remarks from Federal Reserve officials reinforced expectations that US interest rates will stay higher for longer. The US central bank raised its policy rate by 25 basis points last week, its first such move in three years, while Chair Kevin Warsh signaled that further rate increases could come in the months ahead. Other Fed officials, including St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee, continued to stress the need for additional tightening to contain inflation fueled by strong demand and rising energy prices. Markets are now pricing in roughly a 90% chance of another rate hike in December, according to the CME FedWatch Tool. Meanwhile, oil prices fell for a fifth consecutive session following reports that Iran could reopen the Strait of Hormuz within seven days if the US takes initial steps to ease military pressure.

Silver fell toward $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.