Silver (XAG/USD) traded around $58.55 on Friday, marking a 2.24% increase for the day as the US Dollar experienced a modest pullback following its recent rally [1]. This recovery comes after a sharp correction in Silver prices on Thursday, though the metal remains under pressure from a challenging macroeconomic environment that continues to weigh on non-yielding assets [1].
The slight decline in the US Dollar provided temporary support for precious metals, but the effect was limited due to US Treasury yields remaining near recent highs. Investors are still pricing in the risk of persistent inflation, which supports the US Dollar and restricts the upside for Silver [1]. According to the CME FedWatch tool, markets are assigning a meaningful probability to further monetary tightening by the Federal Reserve in the coming months, which could further bolster the US Dollar and limit the appeal of Silver [1].
Geopolitical tensions are also influencing market sentiment. Higher oil prices, driven by attacks on vessels in the Red Sea and escalating conflict in the Middle East, have raised concerns about prolonged disruptions to global energy supplies. This environment has reinforced expectations that the Federal Reserve may need to keep interest rates elevated for longer, or even consider another rate hike if inflationary pressures persist [1]. Ongoing US military strikes against Iran and reports that US President Donald Trump is considering a large-scale military operation against Tehran have heightened uncertainty, supporting safe-haven flows. However, the US Dollar has benefited more than precious metals from this risk-off sentiment, which helps explain Silver's limited recovery despite the Greenback's pullback [1].
CONCLUSION
Silver prices saw a modest rebound as the US Dollar eased, but gains were capped by persistent inflation risks and expectations of further Federal Reserve tightening. Geopolitical tensions and higher oil prices continue to drive market uncertainty, supporting safe-haven demand but favoring the US Dollar over Silver. The outlook for Silver remains cautious amid these competing forces.