Silver (XAG/USD) rebounded to trade around $64.00 per troy ounce during Asian hours after falling to an 11-week low of $61.50 earlier on Thursday [1]. The recovery follows two consecutive days of losses and is attributed to silver's dual role as both a monetary safe-haven and a key industrial commodity [1].
The upside for silver remains limited due to escalating geopolitical tensions. The US military launched a second day of airstrikes against Iran, raising fears of a prolonged Middle East conflict and intensifying global inflation concerns [1]. The airstrikes were described as 'self-defense' actions after an American helicopter was shot down, which led to Iranian retaliatory attacks on US military facilities in Bahrain, Jordan, and Kuwait [1]. US Central Command (CENTCOM) confirmed the strikes began on Wednesday, and President Donald Trump warned of severe military action if an interim peace deal is not reached, while Iranian officials stated they would not back down [1].
On the economic front, May US inflation accelerated at its fastest pace in over three years, driven by surging energy costs, though the data was in line with expectations [1]. This led traders to modestly reduce their projections for Federal Reserve rate hikes, but a quarter-point increase in December remains fully priced in [1]. Market participants are now awaiting the release of May's Producer Price Index (PPI) and Initial Jobless Claims for further direction [1].
The combination of geopolitical instability and inflationary pressures has contributed to market jitters, supporting silver's rebound as investors seek safe-haven assets, though the potential for further gains is seen as limited in the current environment [1].
CONCLUSION
Silver's rebound from an 11-week low reflects its appeal as a safe-haven amid heightened geopolitical tensions and persistent inflation concerns. However, upside potential appears constrained by ongoing Middle East conflict and expectations for further US rate hikes. Market participants are closely watching upcoming economic data for additional cues.