Silver Struggles with Geopolitical Risks and Rate Hike Expectations

Silver prices have been experiencing a tug-of-war between geopolitical risks and rate hike expectations. The ongoing Middle East conflict has driven safe-haven demand for silver, with spot prices currently trading around $57.30/oz.

The Houthi attacks on Saudi oil tankers in the Red Sea, combined with US military airstrikes on targets within Iran, have intensified geopolitical tensions and boosted silver's appeal as a safe-haven asset.

However, expectations of Federal Reserve rate hikes are suppressing silver prices. The CME FedWatch tool shows a 35.8% probability for a 25 basis point rate hike in July and an 82.1% chance of at least one rate hike in September.

This tug-of-war scenario has resulted in a correction of over 4% on Thursday, with silver prices consolidating in the $55-60/oz range.