Silver Tumbles as Fed Hike Bets Soar to New High
Silver prices (XAG/USD) plummeted nearly 3.5% on Monday, falling to around $62.00 per troy ounce, as investors grew increasingly confident that the Federal Reserve will continue tightening policy to combat inflation.
The US-Iran talks have stalled, and oil prices remain elevated, further reinforcing expectations of additional Fed rate hikes. Money markets now assign a 65.9% probability to another Fed rate increase at the October meeting, up sharply from 57.6% a week ago and 9.4% a month ago.
US President Donald Trump rejected Iran's latest proposal to reopen the Strait of Hormuz, but indicated that talks are expected to resume this week. Strategists at OCBC noted that resilient US economic data, elevated energy prices, and persistent inflation concerns continue to drive Treasury yields higher, underpinning the US Dollar while weighing on rate-sensitive assets.