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Silver prices (XAG/USD) fell to $56.70 on Thursday, marking a 1.85% decline, driven by rising energy prices due to renewed US-Iran tensions. The geopolitical tensions have pushed oil prices higher, reigniting fears of sustained global inflation, which pressures central banks to maintain elevated interest rates. This dynamic undermines demand for non-yield assets like silver, which is often seen as a hedge against inflation but is sensitive to real interest rates.
The decline in silver highlights the interplay between geopolitical risks and macroeconomic factors. Energy-driven inflation could delay central bank rate cuts, keeping bond yields and the US dollar strong. For traders, this creates a bearish bias for silver and other industrial metals, while energy-linked assets like crude oil may see short-term gains. The dollar's strength also impacts gold and other commodities, creating a ripple effect across markets.
Investors should monitor OPEC+ policy decisions and US-Iran diplomatic developments, which could either stabilize or exacerbate energy prices. Additionally, upcoming inflation data from major economies will determine if central banks maintain hawkish stances. For now, the focus remains on how geopolitical risks and inflation expectations shape the broader commodity complex.
