Rising expectations of higher interest rates from the Federal Reserve, coupled with a stronger dollar, caused spot silver to fall back to near the lower edge of its trading range.
2026-06-03 15:06:23
Spot silver (XAG/USD) fluctuated and fell during Asian trading on Wednesday, trading around $74.30, giving back some of the gains from the previous session. While escalating tensions in the Middle East continued to fuel risk aversion in the market, a stronger dollar and expectations that the Federal Reserve would maintain high interest rates limited further upside potential for silver.
The recent situation in the Middle East has once again become a focus of global market attention. Reports indicate that Iran launched ballistic missiles towards Kuwait and Bahrain, prompting the United States to retaliate against Iran's Qeshm Island. Meanwhile, the progress of negotiations between the United States and Iran remains highly uncertain, and the market remains wary of further escalation of the regional conflict.
Typically, rising geopolitical risks support safe-haven buying in precious metals. However, the market reaction this time has been somewhat different. Due to persistent shipping risks through the Strait of Hormuz, international energy prices have risen significantly, and the market is beginning to worry about renewed global inflationary pressures. The market generally believes that if shipping through the Strait of Hormuz remains restricted, global energy supplies will face further strain. Market estimates indicate that approximately 20% of global seaborne crude oil shipments pass through this region. Rising energy prices will not only increase business operating costs but may also delay the decline in global inflation.
Against this backdrop, investors have adjusted their expectations for the Federal Reserve's future monetary policy. The market is beginning to believe that US interest rates may remain high for a longer period, thereby curbing inflationary pressures. For silver, a high-interest-rate environment is generally unfavorable for price performance because silver itself does not generate interest income, and the cost of holding it is relatively higher.
Meanwhile, the latest economic data released by the United States further reinforced market expectations that the high-interest-rate environment will continue. Data showed that the US ISM Manufacturing Purchasing Managers' Index rose to 54.0 in May, higher than the previous 52.7 and significantly exceeding market expectations, marking the strongest expansion since May 2022.
The recovery in manufacturing activity indicates that the US economy remains resilient. Meanwhile, the US labor market continues to send positive signals. The latest job openings data shows that JOLTS job openings in the US rose to 7.6118 million in April, a near two-year high, while layoffs continued to decline. Strong manufacturing and employment market data suggest that the US economy has not yet shown significant signs of slowing down. For the Federal Reserve, this means it has more room to maintain its current restrictive monetary policy, thereby ensuring that inflation returns to its target level.
The US dollar index has therefore remained high, exerting significant downward pressure on the precious metals market. Since silver is priced in US dollars, a stronger dollar increases the cost for global investors to purchase silver, thereby weakening market demand. However, from a medium- to long-term perspective, silver remains supported by industrial demand. With the continued expansion of the new energy, power infrastructure, and artificial intelligence industry chains, the market maintains optimistic expectations for industrial silver demand. This is one of the key reasons why silver prices have been able to remain relatively high.
From a technical perspective, spot silver is still in a high-level consolidation phase on the daily chart. The previous continuous price increase accumulated significant profit-taking, making the recent technical correction a normal phenomenon. Currently, the area around $74 is a key short-term support level. If the price breaks below this level, it may further retrace to around $72.50. On the upside, $75.50 forms the first resistance area. If it can regain and hold this level, it may challenge the $77.00 and $79.00 areas again. The MACD indicator is still running above the zero line, but the red histogram momentum has contracted, indicating that the short-term bullish momentum is slowing down.
Observing the 4-hour chart, silver has entered a consolidation phase. The RSI indicator has fallen back to near the neutral zone, indicating that the previous overbought condition has been somewhat corrected. In the short term, the price may fluctuate within the range of $74 to $75.50, and the market is waiting for new fundamental catalysts.
In the coming days, the US non-farm payroll report will be the focus of the market. If the employment data continues to be strong, expectations that the Federal Reserve will maintain high interest rates may further intensify, thus putting pressure on silver; if employment growth slows, it may reignite market expectations for future interest rate cuts, providing an opportunity for a rebound in silver prices.
Editor's Summary:
The silver market is currently in a phase of tug-of-war between safe-haven demand and high interest rate expectations. On the one hand, escalating tensions in the Middle East and rising energy prices are providing some support for precious metals; on the other hand, continued strong US economic data is driving a stronger dollar, limiting silver's upside potential. In the short term, market focus will be on US non-farm payroll data and changes in Federal Reserve policy expectations. If economic data remains strong, silver may maintain its high-level fluctuations; if the labor market shows signs of cooling, it is expected to regain upward momentum. Overall, medium- to long-term industrial demand growth continues to provide significant support for silver.
The recent situation in the Middle East has once again become a focus of global market attention. Reports indicate that Iran launched ballistic missiles towards Kuwait and Bahrain, prompting the United States to retaliate against Iran's Qeshm Island. Meanwhile, the progress of negotiations between the United States and Iran remains highly uncertain, and the market remains wary of further escalation of the regional conflict.
Typically, rising geopolitical risks support safe-haven buying in precious metals. However, the market reaction this time has been somewhat different. Due to persistent shipping risks through the Strait of Hormuz, international energy prices have risen significantly, and the market is beginning to worry about renewed global inflationary pressures. The market generally believes that if shipping through the Strait of Hormuz remains restricted, global energy supplies will face further strain. Market estimates indicate that approximately 20% of global seaborne crude oil shipments pass through this region. Rising energy prices will not only increase business operating costs but may also delay the decline in global inflation.
Against this backdrop, investors have adjusted their expectations for the Federal Reserve's future monetary policy. The market is beginning to believe that US interest rates may remain high for a longer period, thereby curbing inflationary pressures. For silver, a high-interest-rate environment is generally unfavorable for price performance because silver itself does not generate interest income, and the cost of holding it is relatively higher.
Meanwhile, the latest economic data released by the United States further reinforced market expectations that the high-interest-rate environment will continue. Data showed that the US ISM Manufacturing Purchasing Managers' Index rose to 54.0 in May, higher than the previous 52.7 and significantly exceeding market expectations, marking the strongest expansion since May 2022.
The recovery in manufacturing activity indicates that the US economy remains resilient. Meanwhile, the US labor market continues to send positive signals. The latest job openings data shows that JOLTS job openings in the US rose to 7.6118 million in April, a near two-year high, while layoffs continued to decline. Strong manufacturing and employment market data suggest that the US economy has not yet shown significant signs of slowing down. For the Federal Reserve, this means it has more room to maintain its current restrictive monetary policy, thereby ensuring that inflation returns to its target level.
The US dollar index has therefore remained high, exerting significant downward pressure on the precious metals market. Since silver is priced in US dollars, a stronger dollar increases the cost for global investors to purchase silver, thereby weakening market demand. However, from a medium- to long-term perspective, silver remains supported by industrial demand. With the continued expansion of the new energy, power infrastructure, and artificial intelligence industry chains, the market maintains optimistic expectations for industrial silver demand. This is one of the key reasons why silver prices have been able to remain relatively high.
From a technical perspective, spot silver is still in a high-level consolidation phase on the daily chart. The previous continuous price increase accumulated significant profit-taking, making the recent technical correction a normal phenomenon. Currently, the area around $74 is a key short-term support level. If the price breaks below this level, it may further retrace to around $72.50. On the upside, $75.50 forms the first resistance area. If it can regain and hold this level, it may challenge the $77.00 and $79.00 areas again. The MACD indicator is still running above the zero line, but the red histogram momentum has contracted, indicating that the short-term bullish momentum is slowing down.
Observing the 4-hour chart, silver has entered a consolidation phase. The RSI indicator has fallen back to near the neutral zone, indicating that the previous overbought condition has been somewhat corrected. In the short term, the price may fluctuate within the range of $74 to $75.50, and the market is waiting for new fundamental catalysts.
In the coming days, the US non-farm payroll report will be the focus of the market. If the employment data continues to be strong, expectations that the Federal Reserve will maintain high interest rates may further intensify, thus putting pressure on silver; if employment growth slows, it may reignite market expectations for future interest rate cuts, providing an opportunity for a rebound in silver prices.
Editor's Summary:
The silver market is currently in a phase of tug-of-war between safe-haven demand and high interest rate expectations. On the one hand, escalating tensions in the Middle East and rising energy prices are providing some support for precious metals; on the other hand, continued strong US economic data is driving a stronger dollar, limiting silver's upside potential. In the short term, market focus will be on US non-farm payroll data and changes in Federal Reserve policy expectations. If economic data remains strong, silver may maintain its high-level fluctuations; if the labor market shows signs of cooling, it is expected to regain upward momentum. Overall, medium- to long-term industrial demand growth continues to provide significant support for silver.
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- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
