Silver (XAG/USD) regained ground during Thursday’s Asian trading session, rising to approximately $36.30 and halting a two-day decline. The rebound was driven by a weaker U.S. Dollar and heightened geopolitical tensions in the Middle East, both of which bolstered demand for the safe-haven metal.
Market attention now shifts to the upcoming release of the U.S. Producer Price Index (PPI) and weekly Initial Jobless Claims later in the day, data that could further shape interest rate expectations.
Recent softer-than-expected U.S. inflation data for May has intensified speculation that the Federal Reserve may initiate interest rate cuts sooner than previously anticipated. The resulting pressure on the Greenback has supported USD-denominated commodities like silver. According to the CME FedWatch tool, markets are now pricing in a 68% probability of a 25-basis-point rate cut by September, up from 57% before the Consumer Price Index (CPI) report. The likelihood of an earlier move in July has also risen modestly, from 13% to 18%.
In a development highlighting rising geopolitical risk, Reuters reported Wednesday that the U.S. is planning a partial evacuation of its embassy in Iraq and will permit military dependents to leave certain locations in the Middle East due to growing security concerns. Such instability typically fuels demand for precious metals as safe-haven assets, lending further support to silver prices.
However, potential diplomatic progress may temper gains. Axios reported that White House envoy Steve Witkoff is set to meet with Iranian Foreign Minister Abbas Araghchi in Muscat on Sunday to discuss Tehran’s response to a recent U.S. proposal regarding its nuclear program. Any breakthroughs in negotiations could ease tensions and, in turn, limit silver’s upside momentum.
