Silver Price Drops Amid Fed Rate Hike Odds and Middle East Tensions
US President Donald Trump's rejection of Iran's proposal to reopen the Strait of Hormuz has kept market sentiment on high alert. Traders are closely watching Middle Eastern geopolitical developments, as any escalation in tensions could significantly impact global markets.
The Federal Reserve's recent decision to raise its target funds rate range has bolstered the US dollar's strength against the Canadian dollar. Money markets now price in a 65.9% probability of another benchmark interest rate hike at the October Fed meeting, up from 57.6% a week ago and 9.4% a month ago.
Market participants are shifting their focus to key economic indicators scheduled for release this week, including US employment figures and the Fed's preferred inflation metric. These expectations are further supported by recent hawkish remarks from Fed officials, who warn against letting the public accept elevated prices as the new normal.