Silver Surges as Investors Await Federal Reserve Decision Amid US-Iran Tensions

Silver prices rose by over 1% on Wednesday as investors awaited the Federal Reserve's monetary policy decision. The metal gained despite a sharp rebound in oil prices, which jumped amid renewed tensions between the United States and Iran.

The US-Iran conflict has pushed oil prices higher, raising concerns about the potential impact of energy costs on inflation expectations. Higher oil prices have contributed to stronger inflation expectations, making central banks more likely to maintain interest rates at elevated levels or consider keeping monetary policy tighter for longer.

Silver has faced pressure in recent months due to higher oil prices, as the metal does not provide interest income to investors and is viewed as a non-yielding asset. However, if the Federal Reserve holds rates unchanged, real-rate pressure would ease, and silver's 'non-yield' penalty could fade.

Investors are closely watching the Fed's decision, with a 69.5% probability of keeping interest rates at 3.50-3.75%, according to the CME FedWatch tool. A shift in expectations around future monetary policy could influence market sentiment and demand for silver.