During Wednesday’s European trading hours, the price of silver edged closer to $28.50 per troy ounce, buoyed by market caution and the metal’s status as a safe-haven asset. Investors are closely monitoring developments surrounding Israel’s response to Iran’s recent air strike, which has heightened geopolitical tensions in the region.
A Reuters report highlighted the rescheduling of Israel’s war cabinet meeting, originally planned for Tuesday but now slated for Wednesday. The purpose of this meeting is to deliberate on and formulate a response to Iran’s direct attack.
Moreover, a mild correction in the US Dollar has contributed to the increased demand for silver. Despite maintaining a position near its five-month high of 106.51 reached on Tuesday, the US Dollar Index (DXY) has experienced slight downward pressure. Meanwhile, US Treasury bond yields stand at 4.96% for 2-year bonds and 4.65% for 10-year bonds at press time.
Expectations of the Federal Reserve maintaining elevated interest rates for an extended period, driven by a robust US economy and persistent inflation, have also influenced market sentiment. Furthermore, hawkish remarks from Federal Reserve Chair Jerome Powell may further bolster the US Dollar. A stronger US Dollar tends to make silver more expensive for investors using other currencies, potentially impacting demand for the metal.
During his remarks on Tuesday, Federal Reserve Chair Powell suggested that inflationary progress this year has been minimal, implying a prolonged timeline before reaching the 2% target. This statement likely contributed to a more hawkish outlook and provided additional support for the US Dollar.
