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Silver price (XAG/USD) fell 0.73% to $59.50 during European trading on Friday as renewed Middle East tensions failed to offset concerns over the Federal Reserve's potential rate hikes. The white metal's decline reflects market anticipation of tighter monetary policy, which typically pressures non-yielding assets like silver. Geopolitical risks in the Middle East usually act as a tailwind for safe-haven commodities, but this week's price action suggests traders are prioritizing central bank policy signals over regional conflicts.
The Fed's next policy decision remains a key focus for commodity markets. Higher interest rates increase the opportunity cost of holding physical silver, which lacks yield generation. This dynamic is critical for traders monitoring the interplay between macroeconomic factors and geopolitical events. Silver's recent weakness highlights the dominance of monetary policy over traditional safe-haven demand in the current market environment.
Looking ahead, investors should closely track the Fed's upcoming meeting minutes and inflation data releases. The Middle East situation could regain influence if hostilities escalate further, but for now, the technical outlook for silver remains bearish with key support levels at $59.00 and $58.50 under scrutiny. Traders may also watch gold-silver ratio movements as a barometer of relative safe-haven demand.
