Silver climbs 1.8% to $58.13 as traders await Fed rate decision

Silver rose for a second session as traders weighed a rebound in crude oil against the prospect of a hawkish Federal Reserve decision this week.

Silver rose 1.8% to $58.13 an ounce on Tuesday, extending gains even as a rebound in crude oil revived inflation concerns ahead of the Federal Reserve's interest-rate decision.

"Elevated energy prices remain an inflationary concern for Fed members, and the expected hawkish tilt has forced rate-hike expectations and the dollar higher, applying pressure on precious metals," David Meger, director of metals trading at High Ridge Futures, said.

The metal traded between $56.87 and $58.14 during the session, recovering from a bear-flag pattern that had tested support near $55.00 earlier in the week. COMEX silver futures rose in tandem with spot, while gold slipped 1.1% to $4,032.42 an ounce as the dollar steadied near a one-month high.

The Fed concludes its two-day meeting Wednesday, with swaps pricing a 69% chance of holding rates at 3.75% and a 77% probability of a hike at the September meeting. A hawkish outcome could strengthen the dollar and cap silver's upside, while any dovish surprise would remove a key headwind for precious metals.

Oil Rebound Complicates Inflation Outlook

WTI crude climbed 3.5% to $82.06 a barrel, its biggest single-day gain in weeks, after President Trump said Washington was having "good talks" with Iran but warned strikes would resume if negotiations failed. The rebound revived concerns that energy-driven inflation could keep interest rates higher for longer, a dynamic that has weighed on silver since the US-Israeli conflict with Iran began in late February.

Silver has fallen about 24% from its 52-week high of $121.67, pressured by expectations that war-driven inflation would force central banks to maintain restrictive policy. Commerzbank lowered its year-end gold forecast by $300 to $4,500 an ounce, saying a lasting recovery in precious metals was unlikely without a reversal in rate expectations.

Supply-Demand Fundamentals Remain Intact

Despite the macro headwinds, silver's dual role as both an industrial metal and a store of value continues to attract buyers. Industrial demand from solar panel manufacturing and electronics remains robust, while physical investment demand has held steady. LME and COMEX warehouse inventory data will be watched for signs of stockpile draws that could tighten physical supply.

The 52-week range of $36.21 to $121.67 highlights the extreme volatility that has defined silver this year. The metal's next major resistance sits at $60.39, a Fibonacci level that has capped rallies in recent weeks, while support at $55.00 marks the lower boundary of the current consolidation zone.

This article is for informational purposes only and does not constitute investment advice.