Silver (XAG/USD) trades around $57.40 on Tuesday at the time of writing, down 1.7% on the day. The white metal is under pressure as the US Dollar (USD) loses some strength and investors reduce their exposure to safe-haven assets ahead of the Federal Reserve's (Fed) monetary policy decision.
Market sentiment improves following the latest comments from US President Donald Trump, who says the United States (US) is holding "good talks" with Iran. The US President also says he wants to avoid targeting critical infrastructure such as power plants and bridges, while warning that Iran can no longer break agreements. These remarks fuel hopes of a de-escalation in the Middle East conflict, contributing to lower Oil prices and easing concerns over renewed inflationary pressures.
Despite the improvement in geopolitical sentiment, risks have not disappeared completely. Donald Trump warns that US military strikes could resume if negotiations fail, while several security incidents reported in Saudi Arabia, Jordan and Iraq highlight that regional tensions remain elevated.
Investors are also digesting several US economic releases published on Tuesday. The Conference Board Consumer Confidence Index eased to 90.8 in July from 92.2 previously, reflecting a slight deterioration in household sentiment. Meanwhile, the four-week average of the Automatic Data Processing (ADP) NER Pulse report shows that private-sector job creation slowed to just 15K jobs per week in mid-July, confirming a gradual cooling in the labor market.
Attention now turns to the Fed's policy decision on Wednesday. Markets widely expect policymakers to leave interest rates unchanged, but investors will closely monitor the central bank's statement and comments from Fed Chair Jerome Powell for fresh clues on the future path of monetary policy.
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