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- Silver falls following hawkish Jackson Hole remarks from Fed Chair Kevin Warsh signaling potential further rate hikes.
- CME FedWatch tool suggests that markets are pricing in a 57.5% chance of a 25-bps Fed rate hike next month.
- Silver struggles as oil prices rise after Iran launched a coordinated missile strike across multiple locations.
Silver price (XAG/USD) extends its losses for the second successive day, trading around $66.10 per troy ounce during the Asian hours on Monday. The non-yielding Silver declined following hawkish remarks from Federal Reserve (Fed) Chair Kevin Warsh. Warsh said on Friday at the Jackson Hole symposium that policymakers will “have work to do” if they were not confident cost-of-living pressures were easing for Americans. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” said Warsh. “Otherwise, we have work to do,” he added.
Moreover, the Fed’s next interest rate decision will be made on September 15-16. According to the CME FedWatch tool, markets are now pricing in nearly a 57.5% odds of at least 25 basis points (bps) next month, up from 35% before Fed Chair Warsh’s speech.
Silver also remained pressured by higher oil prices after Iran launched a coordinated barrage of ballistic and anti-ship cruise missiles across multiple locations, including Tehran, Lorestan, Karaj, Khorramabad, and Shiraz. The strikes, targeting positions toward the Strait of Hormuz, came in direct response to a vow by the Islamic Revolutionary Guard Corps to avenge a Sunday United States (US) strike on Iranian launchers at Larak Island.
The preceding US strike marked the first direct attack on Iranian military positions in over a month, explicitly targeting rocket sites prepared to lay mines in the strategic waterway. While American forces reported closely monitoring the Strait to ensure the uninterrupted flow of global trade, Washington’s broader strategy had recently favored economic sanctions over direct military actions to compel Tehran back to the negotiating table.
However, TD Securities cited that the backdrop for precious metals has improved as investors reassessd the policy stance of the Fed and the outlook for the Dollar. Strategists note that, “beyond the Fed’s willingness to look past an energy-driven inflation shock, the re-ignition of the dollar debasement theme has also fueled renewed macro discretionary appetite in precious metals,” helping to draw fresh interest into the complex.
