Silver Hangs by a Thread as Hawkish Fed Looms

Silver has shown unexpected resilience in the face of a potentially hawkish Federal Reserve and surging oil prices, but its ability to hold above key support levels may be short-lived.

The recent US core inflation reading came in hotter than expected, strengthening expectations for a Fed rate hike. Markets now assign an 87% probability to a 25 bps increase on Wednesday's FOMC decision.

Despite this, silver has managed to hold above the $63.00 support zone, but the next major test comes with the Fed's decision. A hawkish surprise could push real yields higher and put renewed pressure on the metal.

Rising oil prices have been a dominant driver of financial markets, particularly through their impact on inflation expectations. However, developments in the Middle East remain a key focus, and a de-escalation could lead to an unwind in some aggressive rate hike bets, providing relief for silver.