Market Analysis

The price of silver rose to $30.80 per ounce during Monday's European session, driven by heightened geopolitical tensions in the Middle East. Israeli airstrikes in Rafah on Sunday resulted in at least 35 casualties, intensifying concerns over the Gaza conflict. 

Ceasefire and hostage negotiations scheduled for next week have stalled due to significant disagreements between Israel and Hamas.

The surge in silver prices also coincided with a weaker US Dollar following the release of the University of Michigan's 5-year Consumer Inflation Expectations for May, which showed a slight easing to 3.0%, below the expected 3.1%. Despite an upward revision in the Consumer Sentiment Index to 69.1 from an initial 67.4, it remained at its lowest level in six months. These data points contributed to investor sentiment, hinting at potential Federal Reserve rate cuts.

However, recent comments from Fed officials have taken a more hawkish tone, suggesting a longer period of higher interest rates. Fed Vice Chair Michael Barr emphasized the need for further assessment of restrictive policies, while Atlanta Fed President Raphael Bostic maintained his outlook for only one rate cut this year. Higher interest rates typically reduce the attractiveness of non-yielding assets like silver.

Paraphrasing text from "FX Street" all rights reserved by the original author.