Silver retreats toward $65.00 as Oil rebound revives inflation concerns

Silver prices fell towards $65.00 amid rising oil prices and concerns over inflation in the United States. The precious metal retreated from its seven-week high of $66.59 on Monday due to increasing Oil prices and potential tighter monetary policy in the US. Oil prices surged since the start of the week due to uncertainties surrounding the reopening of the Strait of Hormuz, with Iran demanding war reparations and sanctions removal.

However, positive developments suggest that tensions are easing, but uncertainty remains. West Texas Intermediate (WTI) traded around $81.20, up over 5% since the beginning of the week, despite a daily decline. Higher oil prices are supporting energy prices and raising concerns about US inflation. This has led investors to anticipate further interest rate hikes by the Federal Reserve (Fed), with markets now estimating a 52% chance of a 25-basis-point increase at the September meeting.

The US Dollar (USD) is strengthening, which makes Silver more expensive for investors using other currencies, while higher interest rates increase the opportunity cost of holding non-yielding assets. Investors are now watching the US Consumer Price Index (CPI) data due on Wednesday, as strong inflation could reinforce rate hike expectations and pressure Silver, while easing price pressures could reduce monetary tightening expectations and support the precious metal.

Silver is a highly traded precious metal with various factors affecting its price, including geopolitical events, industrial demand, and the US Dollar's value.