Silver prices lost more than 1.5% in the European market on Tuesday, giving up their highest level in nearly a week and heading towards their first loss in the last three days, under pressure from a rebounding US dollar and rising oil prices, due to concerns about renewed military tensions between the United States and Iran.
Markets are awaiting the release on Wednesday of the minutes from the Federal Reserve's latest meeting, which are expected to contain important clues about the likelihood of US interest rate hikes during the remainder of this year.
Price overview
Silver prices today: Silver prices fell by more than 1.5% to ($64.76), from the opening level of trading at ($65.78), and recorded a high of ($66.57), the highest in about a week.
When prices were settled on Monday, silver prices rose by 1.7%, marking their second consecutive daily gain.
US dollar
The dollar index rose 0.15% on Tuesday, attempting to recover from its lowest levels in 11 weeks, and is on track to achieve its first gain in the last four sessions, reflecting a recovery in the levels of the US currency against a basket of global currencies.
Apart from purchases from low levels, dollar purchases are active as a safe haven, due to fears of a renewed Iranian war, especially after the collapse of the interim peace agreement between the United States and Iran.
global oil prices
Oil prices rose by about 0.5% on Tuesday, extending their gains for a third consecutive day and hitting a three-week high, due to stalled negotiations between the United States and Iran and the disruption of shipping traffic through the Strait of Hormuz.
Undoubtedly, rising global oil prices are renewing fears of accelerating inflation, which could prompt global central banks, especially the Federal Reserve, to raise interest rates in the near term.
Developments in the Iranian war
The 60-day deadline set by the Islamabad understanding has expired without a final agreement being reached between the United States and Iran.
Washington refuses to extend the truce and demands Tehran's surrender, while Iran has declared that it is prepared to adopt a fully offensive military stance if diplomatic efforts fail.
The main point of contention between the United States and Iran remains the Strait of Hormuz, US sanctions, and the guarantees required from both sides.
There are mediation efforts and behind-the-scenes contacts, but no new agreement has been reached yet. Reports indicate that the Trump administration has opened secret channels of communication with Iran.
Efforts are underway to find a mechanism to restore shipping traffic through the strait, but the US position demanding the complete reopening of the strait before making concessions to Iran is complicating the process.
US President Donald Trump has threatened Oman with military action if he believes it is obstructing negotiations, in a development that further complicates mediation efforts.
US interest rate
According to the CME Group's FedWatch tool: The probability of the Federal Reserve keeping interest rates unchanged at its September meeting is currently priced at 65%, and the probability of a 25-basis-point rate hike is priced at 35%.
The probability of the Federal Reserve keeping interest rates unchanged at its December meeting is currently priced at 31%, and the probability of a 25-basis-point rate hike is priced at 69%.
In order to reassess those possibilities, investors are awaiting the release on Wednesday of the minutes from the Federal Reserve’s latest meeting, which are expected to contain strong signals about the path of US interest rates this year.
Silver performance forecast
Here at FX News Today, we predict: Silver prices will move into negative territory and may lose trading above $64 per ounce.
Silver prices could rise again above $66 an ounce with strong chances of hitting new highs in several weeks if mediators succeed in brokering a new ceasefire agreement between the United States and Iran.
