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- Silver faces headwinds as US-Iran clashes boost oil prices, fueling inflation and rate-hike fears.
- Nightly US strikes on Iran prompted Tehran to declare its ceasefire dead, threatening major energy disruptions along key waterways.
- Cleveland Fed President Beth Hammack warned on Friday that inflation remains persistent.
Silver price (XAG/USD) gains ground for the second successive day, trading around $56.80 per troy ounce during the Asian hours on Monday. However, the non-interest-bearing white metal could face tough sledding ahead as United States (US)-Iran clashes drive oil prices higher, and resurfacing inflation risks are fueling expectations for Fed rate hikes.
The US has launched its ninth consecutive night of strikes against Iranian targets. In response, Iranian officials declared that the ceasefire between the two nations has been effectively abandoned, opening the door for deepening disruptions to crucial energy pathways through the region’s narrow waterways.
The conflict has rapidly intensified across the region, triggering air raid sirens in Bahrain after Iran launched a fresh wave of ballistic missiles and one-way attack drones targeting sites across Bahrain, Jordan, Kuwait, and Iraq. Meanwhile, the US military reported the death of a third service member within the span of two days amid the ongoing exchanges.
The violence has also expanded beyond strictly military targets to hit critical infrastructure, with bridges, utilities, and port facilities coming under fire. Over the weekend, Kuwait Petroleum Corp. confirmed that an Iranian strike struck one of its oil facilities on Saturday.
While the central bank is widely expected to hold interest rates steady at its upcoming meeting, market pricing via the CME FedWatch Tool now reflects a 61.4% probability of a rate hike in September.
Hammack flags broad-based inflation pressures, reinforcing hawkish Fed tone
Fed’s Hammack delivers a notably more hawkish message, with a 7.2/10 FXS Speechtracker score standing above the 6.6/10 historical average and underscoring heightened concern about persistent price pressures. The emphasis on businesses calling for action to curb inflation and consumers “who can’t make ends meet” despite solid growth and stable spending highlights a tension between resilient activity and mounting social strain, while references to energy, supply chains, insurance, and AI data centers point to a broad-based and structurally complex inflation mix. By framing “persistently high inflation” as the bigger concern, the speech tilts expectations toward a tighter-for-longer policy stance, supportive of the Dollar on the margin.
The FXS Fed Sentiment Index rose by 2.06 points to 128.64, reinforcing that the broader Fed communication backdrop remains firmly in hawkish territory well above the 100 neutral line. In combination with the above-baseline FXS Speechtracker score for Hammack, this move signals that recent Fed rhetoric continues to lean toward prioritizing inflation control over growth risks, a configuration that typically underpins the Dollar against lower-yielding peers.
