• Silver may weaken as markets expect the Middle East conflict to have a smaller-than-feared impact on inflation.
• Market sentiment improved as oil prices eased after reports that IEA may release record reserves.
• Traders await US CPI data for fresh signals on the Federal Reserve’s policy outlook.

Silver price (XAG/USD) remains flat after experiencing modest volatility, trading around $87.20 per troy ounce during the European hours on Wednesday. The safe-haven Silver may lose ground amid optimism that the Middle East conflict may have a smaller impact on inflation than initially feared. This could prompt Federal Reserve (Fed) policymakers to again lean toward potential rate cuts.

Market sentiment improved as oil prices cooled after the Wall Street Journal reported that the International Energy Agency (IEA) is considering its largest-ever oil reserve release to stabilize markets. The proposed drawdown would exceed the 182 million barrels released in 2022 following Russia’s invasion of Ukraine.

Investor confidence also improved after US President Donald Trump said the conflict could end quickly and announced that the US Navy would escort tankers through the Strait of Hormuz to protect key shipping routes.

However, US officials indicated on Tuesday that military operations in Iran were intensifying, with limited prospects for diplomatic negotiations. Meanwhile, Iran’s Revolutionary Guards warned that the Strait of Hormuz blockade would continue until US and Israeli attacks cease.

Traders will observe key US Consumer Price Index (CPI) data later in the day. Traders will shift their focus toward Friday’s Personal Consumption Expenditures (PCE) Price Index data. These figures may offer fresh signals on the Federal Reserve’s (Fed) policy outlook.

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