Silver Slumps as Oil Rebound Reignites Inflation Fears

Silver prices retreated on Tuesday, falling over 2% to around $65.05 as oil rebounded and revived concerns about inflation. The white metal had hit a seven-week high of $66.59 on Monday but struggled to maintain its momentum in the face of rising energy costs.

The price of West Texas Intermediate (WTI) crude oil has surged by more than 5% since the start of the week, reaching around $81.20 despite a daily decline. Higher oil prices are supporting energy markets and fueling concerns about US inflation, which could lead to further monetary tightening by the Federal Reserve.

Cleveland Federal Reserve President Beth Hammack stated on Monday that current monetary policy 'is not hurting the economy' and suggested that interest rates may need to be raised more than once to bring inflation back in line with target levels. This view has contributed to a 52% chance of a 25-basis-point rate hike at the September meeting, up from around 44% previously.