Silver Under Pressure as Demand-Driven Inflation Keeps Fed Hike Expectations High

Chicago Fed President Austan Goolsbee emphasized that strong domestic demand could be contributing to inflation, not just energy prices and supply shocks. Minneapolis Fed President Neel Kashkari also noted that elevated inflationary pressures are not solely driven by higher oil prices.

This distinction is crucial for the monetary policy outlook, as robust demand-based inflation may require interest rates to remain higher for longer. The CME FedWatch tool shows markets anticipate a nearly 90% chance of at least one more interest rate hike this year.

Silver is affected by these expectations, as it offers no yield and tends to lose appeal when interest rates rise. The Federal Reserve already increased its benchmark interest rate last week to 3.75%-4%, with 16 out of 18 policymakers expecting at least one additional increase this year.