Silver price in India declines over 2% amid Fed rate uncertainty and Middle East tensions; US inflation data awaited

Silver rate today: Silver prices in India extended losses on Thursday, 11 June as markets grappled with rising inflation concerns, geopolitical tensions and expectations of higher US interest rates. Meanwhile, investors awaited a key US inflation report that could provide fresh signals on the Federal Reserve's interest rate trajectory.

MCX Silver rate fell over 2% to ₹2,30,493 per kg while MCX Gold price declined 1% to ₹1,46,444 per 10 grams.

However, globally, the precious metals rebounded. Spot silver rose 0.3% to $63.86 per ounce. Gold also witnessed a modest rebound. Spot gold rose 0.4% to $4,089.12 per ounce by 0215 GMT after earlier falling to $4,022.09, its lowest level since November 21. Meanwhile, US gold futures for August delivery declined 0.5% to $4,111.10.

Investors are now closely monitoring the release of the US Producer Price Index (PPI) data for May, which is expected later in the day. The report is likely to provide further insight into inflationary pressures and influence expectations regarding future Federal Reserve policy decisions.

Geopolitical tensions and oil prices remain key drivers

Apart from inflation and monetary policy concerns, geopolitical developments in the Middle East continue to influence precious metal markets.

The United States launched a fresh round of strikes against multiple targets in Iran overnight, according to the US military. The action came just hours after President Donald Trump warned of additional attacks if a peace agreement is not reached.

The escalation has heightened concerns over global energy supplies after Iran announced the closure of the Strait of Hormuz, one of the world's most critical oil transit routes.

As a result, oil prices climbed more than $2 on Thursday, adding to worries that higher energy costs could keep inflation elevated for an extended period. Such a scenario could complicate the Federal Reserve's efforts to bring inflation under control and influence future policy decisions.

While silver found support from short-covering activity, investors remain focused on incoming economic data and central bank signals. The release of the US Producer Price Index later in the day is expected to provide further insight into inflation trends and could determine the near-term direction of precious metals.

Market sentiment has been influenced by recent economic data showing that US consumer inflation accelerated in May at its fastest pace in three years. The increase was largely driven by a sharp rise in energy prices amid escalating tensions in the Middle East.

The stronger inflation readings have raised concerns that the Federal Reserve may be forced to maintain a hawkish stance or even consider further monetary tightening. According to the CME FedWatch tool, traders are currently pricing in a more than 70% probability of a US interest rate hike by December.

Higher interest rates generally weigh on precious metals because they do not generate interest income. As yields on competing assets rise, investor demand for non-yielding assets such as silver and gold tends to weaken.

Outlook Ahead

According to Renisha Chainani, Head - Research at Augmont, Gold and silver extended losses as the United States launched fresh military strikes against Iran following the downing of a U.S. Apache helicopter in the Strait of Hormuz.

"The strikes have deepened uncertainty over a potential ceasefire, while prolonging the near-total closure of the Strait of Hormuz — a critical corridor for energy shipments from the Middle East to global markets. The escalation has cast serious doubt on ongoing peace negotiations and strained an already fragile truce. Continued closure of the Strait of Hormuz poses broader risks to global energy flows, sustaining elevated geopolitical risk premiums across financial markets," Chainani noted.

She further informed that Rate expectations have shifted materially, with CME FedWatch data showing markets pricing a greater than 70% probability of a Federal Reserve rate hike by December.

On the technical front, she stated that Gold has breached the critical support level of $4300 (~ ₹154,000), opening the $4000–$4100 range (~ ₹146,000– ₹148,500) as the next downside target.

Silver has similarly broken below key support at $66 (~ ₹240,000), a level whose loss is likely to accelerate selling pressure toward $60 (~ ₹215,000) in the near term, added the expert.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.