Silver Price Outlook: XAG/USD Slips as Rising Oil Prices Boost Fed Rate Hike Expectations

Last Updated on 14/07/2026

• Silver prices declined as escalating tensions in the Middle East drove oil prices higher, fueling inflation concerns and reinforcing expectations that the Federal Reserve will keep interest rates elevated for longer.
• According to the CME FedWatch Tool, markets now assign a 51% probability to a Fed rate hike in September, compared with a 23% chance that policymakers leave rates unchanged.
• Meanwhile, U.S. President Donald Trump reinstated a blockade targeting Iranian vessels and introduced a 20% transit fee on non-Iranian ships using the Strait of Hormuz under U.S. protection.

Silver prices (XAG/USD) extended their decline for a third straight session, trading near $57.60 per troy ounce during Tuesday’s Asian session. The non-yielding precious metal remained under pressure as intensifying tensions in the Middle East pushed crude oil prices higher, raising concerns that stronger energy-driven inflation could keep the Federal Reserve on a restrictive policy path for longer.

Rate expectations have turned increasingly hawkish. According to the CME FedWatch Tool, traders now see a 51% chance of a Fed rate increase in September, while the probability of policymakers leaving rates unchanged has dropped to 23%.

Geopolitical risks escalated after US President Donald Trump reinstated a naval blockade targeting Iranian vessels and ships linked to Iran passing through the Strait of Hormuz. He also announced a 20% transit fee on all other commercial cargo vessels using the strategic shipping route.

Investors are now focused on two key US events scheduled for Tuesday. The June Consumer Price Index (CPI) report is expected to show headline inflation falling 0.1% month-over-month, while core CPI is forecast to remain firm with a 0.3% monthly increase, highlighting persistent underlying price pressures.

Attention will also turn to Federal Reserve Chair Kevin Warsh, who is set to testify before Congress. Market participants will closely scrutinize his remarks for clues on whether Fed officials share the market’s increasingly hawkish outlook and are prepared to keep monetary policy tighter for longer.