International spot silver extended its choppy downward trend during Monday's Asian trading session, with prices hovering around $58.00 per ounce, marking a second consecutive day of losses. While geopolitical risks have boosted safe-haven demand, inflationary pressures stemming from rising energy prices have also strengthened market expectations for U.S. interest rates to remain elevated, contributing to silver's short-term pattern of low-level consolidation.
The U.S. Central Command launched another round of military strikes against Iran-linked targets on Sunday night, aiming to degrade Iran's capability to attack commercial vessels in the Strait of Hormuz. Concurrently, the U.S. military has struck over 300 targets in the past three days, with approximately 140 targets hit on Saturday alone. Significant disagreements between the U.S. and Iran regarding the maintenance of normal traffic through the Strait of Hormuz persist, further heightening market concerns over global energy supply security. The Strait handles about 20% of the world's seaborne crude oil shipments. As tensions in the Middle East continue, international crude oil prices have strengthened again, and rising energy costs have made markets more cautious about the global inflation outlook. The resurgence of inflation expectations implies the Federal Reserve may need to maintain a relatively tight monetary policy for a longer period. A high-interest-rate environment increases the opportunity cost of holding non-yielding assets to some extent, posing a constraint on silver's upside.
Previously, the U.S. and Iran had reached a phased agreement, leading markets to anticipate a gradual normalization of energy supplies from the Middle East, which in turn caused international oil prices to retreat. However, the recent escalation in military conflicts has rapidly cooled that previously formed optimism. Iran has indicated that further negotiations are difficult to resume until the U.S. fulfills its prior commitments regarding ensuring shipping security and restoring Iranian crude oil exports, suggesting significant regional uncertainty persists in the near term.
Market focus is now turning to the U.S. Consumer Price Index (CPI) data for June, scheduled for release this week. The market expects the headline month-on-month CPI to decline by 0.1%, while the core month-on-month CPI is forecast to rise by 0.3%. If the actual figures fall short of market expectations, concerns about further Fed policy tightening could ease, potentially leading to a pullback in the U.S. dollar and Treasury yields, which would provide support for silver. Conversely, if inflation data remains resilient, it could reinforce market expectations for further rate hikes within the year, capping silver's potential gains.
Additionally, markets will be attentive to Federal Reserve Chair Kevin Warsh's inaugural congressional testimony this week. Investors will focus on his latest remarks regarding the U.S. economy, inflation trajectory, and the future path of monetary policy to better gauge the Fed's subsequent policy direction.
From a technical perspective, spot silver's daily chart continues to show a weak, consolidative pattern, with prices trading below the medium- and long-term moving average system, indicating the downtrend has not changed significantly. The MACD indicator remains below the zero line, though the growth rate of the red histogram has slowed, suggesting upward momentum is stabilizing. The RSI is holding in a neutral-to-strong zone, indicating some short-term upward potential remains. A decisive break above $60.00 could pave the way for a further challenge of resistance zones near $61.20 and $62.50. Key support levels to watch on the downside are $58.00, $57.00, and $55.80. A break below these levels could trigger a phase of corrective selling.
On the 4-hour chart, silver maintains a low-level consolidation pattern, with prices trading near the short-term moving averages. The MACD is above the zero line, but its red histogram is narrowing, while the RSI is holding around 55, indicating a balance between bullish and bearish forces. If the U.S. CPI data disappoints market expectations, silver could potentially break through the $60.00 level and extend its gains. Conversely, if strong inflation figures fuel further dollar strength, the silver price may retest support near $57.20, with short-term volatility expected to increase further.
Silver is currently influenced by both safe-haven demand and high-interest-rate expectations. The escalation in U.S.-Iran tensions has boosted market risk aversion, but inflationary pressures from rising energy prices have also reinforced expectations for the Fed to maintain a tight policy stance, keeping silver in a short-term low-level consolidation. This week's U.S. June CPI data and Fed Chair Kevin Warsh's congressional testimony will be key catalysts determining silver's next directional move. If U.S. inflation continues to moderate, silver could find room to strengthen further. However, if expectations for high rates continue to build, silver may remain stuck in a low-level, range-bound pattern.
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