Silver stabilised on Tuesday, supported by a softer US dollar as traders positioned ahead of the latest US inflation data and testimony from Federal Reserve Chair Kevin Warsh. However, the broader backdrop remains challenging for the metal.
Persistent tensions in the Middle East have been driving oil prices up, raising concerns that inflationary pressures could remain.
As a result, central banks are expected to maintain a cautious stance and a potential hawkish tilt, supporting bond yields and weighing on non-yielding assets such as silver.
Today’s US CPI report will therefore be closely scrutinised. While headline inflation is expected to decline by 0.1% and core inflation to remain at 0.2% on a monthly basis, both measures are projected to stay above the Federal Reserve’s 2% target on an annual basis.
Markets will also pay close attention to Warsh’s remarks for further guidance on the monetary policy outlook. Any hawkish indications could push bond yields up and weigh on silver.
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