Silver Retreats from Seven-Week High Despite Soft US Inflation Data

Silver prices retreated from a seven-week high despite a softer-than-expected U.S. inflation report, which has bolstered expectations for easier monetary policy. The Bureau of Labor Statistics released data showing that consumer prices rose just 0.1% in July, with annual inflation easing to 3.4% from 3.5% the previous month.

Core prices, excluding volatile food and energy costs, increased by 0.2% during the month and 2.5% annually. The relatively mild report reduced some concerns that inflation would force the Federal Reserve to maintain higher interest rates.

However, silver failed to extend its recent rally following the report. It has gained almost 13% over the past month, but remains well below its record high reached in January. Investors now face competing forces that could determine whether the rally continues.

Tensions around the Strait of Hormuz have pushed oil prices higher, which could push inflation higher and keep interest rates elevated. On the other hand, softer U.S. employment data has strengthened expectations for lower interest rates and weakened the dollar.