Spot silver rose more than 2% to around $53.00 per ounce in Asian trading on Monday (November 9), reaching a high of $53.45 per ounce as of 12:10, nearing a one-and-a-half-week high, as expectations of falling oil prices eased inflationary pressures. Crude oil prices fell after Trump stated that further military strikes against Iran were "highly unlikely" as long as Iran's nuclear program made progress and the Strait of Hormuz remained open. Trump also pointed out that the unpopular Middle East conflict had driven up energy costs and was one of the reasons for the Republican Party's recent midterm election losses. According to media reports, Trump reiterated in a phone interview that additional military action might not be necessary if Iran signed a solid agreement. Despite previous hints of resuming large-scale attacks after the midterm elections, no large-scale US military action has been launched. Meanwhile, Iran warned that it would retaliate against any future strikes, targeting US and Israeli assets.

Oil price channels: Easing geopolitical tensions suppress oil prices and ease inflationary pressures.

The Democratic Party's victory in the midterm elections, coupled with Trump's latest statements on Iran, jointly pushed down oil prices, which in turn transmitted to silver through inflation expectations. Trump explicitly stated that further military strikes against Iran are "highly unlikely" as long as Iran's nuclear program makes progress and the Strait of Hormuz remains open. The market interpreted this as a significant reduction in the risk of escalation of the Middle East conflict. The subsequent expectation of lower oil prices eased global energy cost pressures, thereby reducing the urgency of rising inflation. For silver, which yields no returns, easing inflationary pressures are theoretically beneficial: it lowers the opportunity cost of holding precious metals and reduces the urgency of further interest rate hikes by the Federal Reserve, thus providing marginal support for silver prices. However, the sustainability of this channel is highly dependent on whether the decline in oil prices can continue and whether there is a new escalation in the Middle East situation. If Iran's warnings of retaliation materialize, negotiations break down, or actual military action resumes, a rebound in oil prices will quickly reverse this support, and the foundation for a silver rebound will also be shaken.

Interest rate hike constraints: Over 78% probability of a December hike; strong employment data limits gains.

However, non-yielding silver still faces strong constraints from the expectation of a Fed rate hike in December. According to the CME FedWatch tool, the probability of another 25 basis point rate hike at the December FOMC meeting has risen to over 78%. Strong US employment data provided significant support for the dollar: October non-farm payrolls increased by 165,000, easily exceeding the market consensus of 65,000, and continued to grow on top of the upward revision of 60,000 in September; the unemployment rate fell to 4.1%, better than the expected 4.2%. The employment data for the previous two months were also significantly revised upwards, further strengthening evidence of the resilience of the labor market. This set of data indicates that the US job market is far more robust than previously expected, providing a data basis for the Fed to continue tightening policy. Traders are now closely watching Tuesday's CPI and Friday's PPI for further signals on the policy path. The support for silver from falling oil prices is marginal and temporary, while the dominance of rate hike expectations limits the upside potential of silver prices—the current rise around $53.00 is more of a combination of oversold correction and positive oil price news than a trend reversal.

Institutional Perspective: US Data and Fed Speeches Will Test Dollar Repricing

Some institutional strategists emphasize that the recent shift in Federal Reserve expectations and the weakening dollar will face direct testing from the dense US data calendar and official speeches. They point out that "US data and Fed officials' speeches will test the repricing of Fed expectations and the downside risks to the dollar," believing that the combination of scheduled data releases and Fed communications is crucial in verifying whether the market has gone too far in pricing in the prospect of tapering and further dollar decline. The core implication of this perspective is that the current tug-of-war between bulls and bears in silver is essentially a key test of the market's pricing in the Fed's policy path. If the upcoming inflation data and official speeches support maintaining high expectations for interest rate hikes, the dollar will be supported and strengthen, thus suppressing silver prices; conversely, if the data is weak and the officials' rhetoric is dovish, the dollar will continue to weaken, and silver's rebound will have room to continue. Traders need to closely monitor the data results and speech details to determine whether current pricing has been excessive.

in conclusion

Spot silver is currently up over 2%, primarily driven by easing expectations of falling oil prices and inflationary pressures – Trump stated that further strikes against Iran are "highly unlikely." However, the probability of a December rate hike has risen to over 78%, and strong employment data – with October non-farm payrolls increasing by 165,000 and the unemployment rate falling to 4.1% – is supporting the US dollar and limiting silver's upside potential. Analysts point out that US data and Fed speeches will test whether the dollar's repricing has gone too far. Short-term trends depend on Tuesday's CPI and Friday's PPI – if inflation data strengthens rate hike expectations, a stronger dollar will suppress silver; if the data is weaker, silver's rebound will continue. The sustainability of the oil price-driven rally depends on whether there is a new escalation in the Middle East situation. (Spot silver daily chart, source: EasyTrade) At 12:12 Beijing time, spot silver was trading at $53.04 per ounce.