Silver declines as renewed US-Iran friction stokes inflation fears, backing expectations for prolonged tight monetary policy.
The US confirmed self-defense strikes in southern Iran, while Iran claimed it targeted a US F-35 jet and several drones.
Traders assess the Fed's outlook as May's consumer confidence dipped on Iran-conflict-driven inflation fears.
Silver price (XAG/USD) remains subdued for the second successive day, trading around $76.90 per troy ounce during the Asian hours on Wednesday. The non-interest-bearing white metal holds losses due to renewed tensions and ongoing uncertainty around the strategic Strait of Hormuz. However, traders track potential progress toward a US-Iran peace agreement.
The diplomatic friction comes amid fresh military clashes in the region, which increases fears of an energy-driven inflation shock, strengthening expectations that central banks could keep monetary policy tighter for longer.
The US military confirmed it launched self-defense strikes in southern Iran, while Iran’s Revolutionary Guard claimed it targeted an American F-35 fighter jet and several drones that had allegedly violated Iranian airspace.
Iran's foreign ministry has condemned recent US airstrikes in the southern Hormozgan province, labeling them a "gross violation" of a tenuous, seven-week-old ceasefire. The statement followed reports from Iranian media of explosions echoing through the region early Tuesday morning.
Traders assess the Federal Reserve's monetary outlook, which heavily influences the price of non-yielding Silver. The US Consumer Confidence Index dipped 0.7 points to 93.1 in May, down from an upwardly revised 93.8 in April. The decline was fueled by intensifying inflation worries linked to the conflict in Iran. While households expressed widespread pessimism regarding the current labor market, they did anticipate conditions to improve by the end of the year.
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