Silver price (XAG/USD) remains flat after registering 5.18% losses in the previous day, hovering around $73.70 per troy ounce during the Asian hours on Wednesday. The white metal struggled as the prolonged United States (US)-Iran conflict has effectively kept the vital Strait of Hormuz closed to shipping traffic. This disruption has pushed oil prices higher, adding to inflationary pressures and increasing the likelihood of higher interest rates globally.
Geopolitical tensions escalated further as US President Donald Trump recently threatened to resume attacks on Iran within two or three days to force a deal ending the war, following a brief pause after a new proposal from Tehran. In response, an Iranian official asserted that the US threat of a massive assault would be met resolutely, stating that Iran is fully prepared to confront any military aggression.
These war-driven energy price pressures have significantly increased inflation risks in the United States, which have reinforced expectations that the Federal Reserve (Fed) may need to maintain higher interest rates for longer or even tighten monetary policy further. Additionally, a sharp increase in yields reflects renewed market concerns that inflation could remain elevated for longer than previously anticipated.
In the bond market, the US 30-Year Treasury Yield inched lower to 5.181% after reaching a nearly 19-year high of 5.200% on Wednesday. Meanwhile, shorter-term yields maintained their upward momentum, with the 10-Year Treasury Yield remaining stronger near its 16-month high of 4.687% and the 2-year yield holding near its 15-month high of 4.139%, both recorded on Tuesday.
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