FX.co ★ Silver Holds Decline on Inflation Worries

Silver hovered around $73 an ounce on Wednesday after sliding more than 3% in the previous session, as stalled US–Iran peace talks and the continued closure of the Strait of Hormuz heightened fears of rising inflation. President Donald Trump said Iran has urged the US to lift its naval blockade of the strait while negotiations to end the conflict proceed, with existing disruptions already tightening energy supplies from the Middle East.

The shutdown of this critical shipping route has choked off roughly 20% of global oil flows, triggering what the IEA has called the largest supply shock on record and further stoking inflationary pressures. In response, investors have increasingly priced in the risk that central banks will keep interest rates higher for longer, or even raise them further, a scenario that typically weighs on non-yielding precious metals such as silver.

Earlier this week, the Bank of Japan left its policy rate unchanged. Meanwhile, central banks in the US, euro area, UK, and Canada are scheduled to announce their policy decisions later this week.