Silver prices surged to nearly $28.00 per troy ounce during the European trading session on Monday, bolstered by escalating geopolitical tensions in the Middle East that have heightened demand for safe-haven assets like silver.
Geopolitical unrest unfolded as Israel Defense Forces (IDF) intercepted approximately 30 “projectiles” crossing from Lebanon into northern Israel early Monday. The IDF reported that the projectiles landed in open areas without causing any injuries, according to ABC News.
Meanwhile, tensions intensified in Gaza as Reuters reported on Saturday that an Israeli airstrike targeted a school compound, resulting in at least 90 reported fatalities, a figure disputed by Israel as exaggerated. Amidst this turmoil, Hamas expressed hesitance regarding entering new ceasefire discussions on Sunday.
The recent surge in silver prices comes in contrast to last week’s positive US economic data, which prompted traders to revise down expectations of a 50-basis point interest rate cut by the US Federal Reserve in September. The CME FedWatch Tool now indicates a 46.5% probability of a 25-basis point rate cut at the upcoming meeting, a significant decrease from the 74.0% likelihood projected a week earlier. The anticipation of sustained higher interest rates may exert pressure on non-yielding assets like silver.
Federal Reserve Governor Michelle Bowman, as reported by Bloomberg on Sunday, highlighted potential upside risks for inflation and emphasized the continued strength of the labor market. These remarks suggest that the Federal Reserve may not be inclined to implement rate cuts at the September meeting.
Amidst concerns over global manufacturing activity, demand for silver as an industrial input has been dampened. The ISM PMI recorded a sharper decline than anticipated, underscoring subdued momentum in the US factory sector. Market participants are awaiting the release of US producer inflation data on Tuesday and consumer inflation figures on Wednesday to gauge the stability of price growth.
In conclusion, the surge in silver prices amidst geopolitical tensions and economic uncertainties underscores the complex interplay between market dynamics and external factors shaping the precious metal’s trajectory in the near term. Traders are closely monitoring developments on multiple fronts to navigate the evolving landscape of the silver market.
