Hawkish Fed Outlook Strengthens Dollar, Pressures Silver

A hawkish monetary policy outlook from the Federal Reserve continued to support the US Dollar, which in turn weighed on commodity prices and other major currencies. The US Dollar Index (DXY) held firm near recent highs, while currencies like the New Zealand Dollar and Canadian Dollar softened against the greenback. This sentiment was cited as a primary factor behind the decline in silver prices.

Conflicting Signals Emerge on US-Iran Tensions

Geopolitical developments in the Middle East produced conflicting signals for the market, creating uncertainty. Initial reports of an interim peace deal between the US and Iran, leading to the end of a naval blockade in the Strait of Hormuz, caused oil prices to ease. However, subsequent news that the US Vice President canceled a trip for related talks and that the Pentagon requested war-related funding cast doubt on the de-escalation efforts.

Bank of Japan Signals Further Rate Hikes

The Bank of Japan (BoJ) indicated a continued shift toward tighter monetary policy, with officials flagging the potential for further interest rate hikes to address inflation risks. Meeting minutes from April showed that some board members had called for a faster pace of tightening, and the bank remains watchful of the economic impact of Middle East events. Despite this hawkish rhetoric, the Japanese Yen has remained weak, prompting officials to warn against speculative moves in the currency market.