Spot Silver extended gains to a fresh 2-week high on Thursday amid optimism the US and Iran may be moving closer to a peace deal. This has led to a significant drop in oil prices and eased concerns over elevated inflation.
Media reports stated that Washington and Tehran were working towards a one-page memorandum to put an end to the confrontation in the Gulf, while tricky issues such as Iran’s nuclear programme would be left for later.
Brent prices held just above $100 per barrel.
Elevated energy costs have added to global inflation expectations and kept central bank policy makers wary of adopting a more dovish stance. In turn, the reduced probability of near-term interest rate cuts by central banks has weighed on non-interest-bearing Silver.
Federal Reserve Bank of Chicago President Austan Goolsbee warned that inflation had not continued to ease toward the central bank’s 2% objective.
Investors now braced for the key US Non-Farm Payrolls report, which may provide fresh clues on the Fed’s monetary policy path. Indications of a cooling labor market could revive the case for interest rate cuts.
Spot Silver was last up 3.06% on the day to trade at $79.62 per troy ounce.
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