Silver Prices Under Pressure as Fed Hawkishness and Geopolitical Uncertainties Weigh In

The silver market is under pressure due to the Federal Reserve's hawkish stance and ongoing geopolitical uncertainties. The recent interest rate meeting by the Fed has heightened expectations of a potential interest rate hike, which may further suppress precious metal prices. However, despite cooling U.S. inflation data for June, which fell more than expected at 3.5% year-on-year, market sentiment remains cautious. The drop in energy prices and low wage growth rates are seen as factors that will help contain inflation.

The U.S. economy continues to show resilience, with the manufacturing PMI in June coming in at 53.3, lower than expected but still indicating overall expansion. The services PMI dropped from 54.5 to 54.0, below the expected 54.2, but remained in the expansion range for 24 consecutive months.

Despite a possible rate hike by the Federal Reserve this week, market expectations lean toward caution due to ongoing geopolitical tensions and volatile international oil prices. The global silver supply gap is estimated to be around 1,440 tons in 2026, which may further support silver prices. However, industrial demand for silver has been declining consecutively over the past few years.