Silver’s rally has paused, but the case for a deeper collapse is not as clean as Monday’s price action suggests.
The metal slipped back towards $62 an ounce after four straight days of gains, as traders booked profits before the Federal Reserve’s June meeting minutes.
Yet two of the bigger pressures that hurt silver last month are now easing: oil has fallen back towards multi-month lows, and markets have trimmed some expectations for another US rate increase.
That leaves XAG/USD under pressure in the short term, but not without support.
Pullback follows a sharp rebound
Spot silver fell about 1% to trade near $61.80 in Asian hours, ending a four-day advance that had carried the metal back above $62.
The move looked more like a pause after a fast recovery than a decisive breakdown.
Silver had been recovering alongside gold after last week’s softer US labour-market reading reduced concern that the Fed would need to move quickly on rates.
CME FedWatch pricing still suggests traders see a meaningful chance of a September hike, but the probability has eased from levels seen before the data.
That matters for silver because it does not offer yield. When rate expectations rise, cash and bonds become more attractive.
When those expectations soften, precious metals usually get room to stabilise.
Oil weakness offers inflation relief
The bigger cushion may come from crude. Brent traded around $71.80 a barrel, close to last week’s five-month low, after OPEC+ agreed to raise August output targets by 188000 barrels per day.
Shipping flows through the Strait of Hormuz have also improved, easing some of the war-risk premium that had pushed energy prices higher.
Citi analysts expect Brent to fall towards $60 by the end of the year as supply conditions normalise and Hormuz-related disruption fades.
If that view proves right, lower energy prices would take pressure off inflation expectations and reduce the need for more aggressive Fed tightening.
For silver, that is important. The metal suffered when oil’s spike revived inflation fears.
A calmer energy market gives investors a reason to resist selling every rebound.
Fed minutes may decide the next move
The next catalyst is Wednesday’s FOMC minutes from the June 16-17 meeting.
Investors will be looking for how strongly policymakers debated another hike, especially before the recent slide in oil and the softer rate-pricing backdrop.
Technically, silver is still fragile. XAG/USD remains below the 20-day exponential moving average near $63.53, which is the first level bulls need to reclaim.
A close above that zone could open a recovery towards $67.17 and then $70.
On the downside, the June 24 low near $55.63 remains the key floor. A break below that would suggest the recent rebound has failed.
Until then, silver is caught between profit-taking and a macro backdrop that is slowly becoming less hostile.
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