Key Moments
- XAG/USD trades around $67.70 per troy ounce, marking a second consecutive day of weakness.
- Rising Middle East tensions lift oil prices and stoke inflation and rate concerns, weighing on Silver.
- Stronger US Nonfarm Payrolls and a steady 4.3% Unemployment Rate reinforce expectations of a potential Fed rate hike this year.
Geopolitics and Oil Rally Undercut Silver
Silver prices (XAG/USD) remain under pressure for a second straight session, with the metal changing hands near $67.70 per troy ounce during Asian trading on Monday. The non-yielding asset is losing favor as escalating tensions in the Middle East push oil prices higher and intensify fears about persistent inflation and the prospect of higher interest rates.
According to a report from the BBC on Monday, the Israel Defense Forces (IDF) reportedly targeted military installations in Iran after an Iranian missile barrage aimed at northern Israel. This latest step came despite US President Donald Trump’s criticism of earlier Israeli actions in Beirut and his ongoing efforts to broker a diplomatic path between Prime Minister Netanyahu and Tehran.
Prior to the reported Israeli response, Iran had fired multiple missile salvos toward Israel, issuing warnings against further operations in Lebanon and threatening a delicate ceasefire amid stalled peace discussions. Israel’s military indicated that all incoming missiles were intercepted and that there were no casualties, but the heightened confrontation significantly unsettled energy markets.
Stronger US Labor Data Bolsters Fed Hike Expectations
Silver and other precious metals are also facing headwinds from firmer US economic data that has strengthened expectations that the Federal Reserve could opt for an interest rate increase later this year.
US Nonfarm Payrolls (NFP) rose by 172,000 jobs in May. This followed a prior reading of 179,000 jobs, revised up from 115,000. Over the same period, the Unemployment Rate remained at 4.3%. The combination of resilient job creation and a steady jobless rate is reinforcing the view that monetary policy may stay restrictive for longer, diminishing the appeal of yield-free assets such as Silver.
Key US Labor Market Figures
| Indicator | Period | Latest Reading | Previous Reading |
|---|---|---|---|
| Nonfarm Payrolls (NFP) | May | 172,000 | 179,000 (revised from 115,000) |
| Unemployment Rate | May | 4.3% | 4.3% |
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