Silver Prices Plummet Amidst Escalating Tensions and Rate Hike Expectations
The silver market took a significant hit on Thursday, with prices dropping by 5.6% to $64.09 an ounce. The decline was triggered by a US military strike on an Iranian island in the Strait of Hormuz, which led to energy price increases and heightened inflation worries.
As a result, the Federal Reserve's likelihood of raising interest rates next week has jumped to 69.4%, according to the CME FedWatch Tool. The central bank's meeting is scheduled for September 15-16, and the August consumer price report due later today will be a key catalyst in determining policymakers' decisions.
Fed Chair Warsh stated that there is still 'work' to do in fighting inflation, citing producer prices for August at 5.4%, above the consensus of 5.3%. The physical market, however, remains tight, with COMEX warehouses holding only 99.4 million ounces available for delivery against futures contracts.