XAG/USD holds gains above $57.50 despite rising Fed rate hike odds

• Silver faces pressure as Middle East tensions raise oil prices, boosting Fed rate hike bets and depressing non-yielding assets.
• CME FedWatch tool shows a 35.8% chance of a July Fed hike and an 82.1% probability for September.
• Geopolitical tensions surged after Houthis attacked two Saudi tankers, prompting the US to conduct strikes on Iran.

Silver price (XAG/USD) inches higher after registering over 4% losses in the previous day, trading around $57.60 per troy ounce during the Asian hours on Friday. However, higher oil prices tied to Middle East tensions are strengthening bets on Fed rate hikes, threatening to weigh on non-yielding Silver.

According to the CME FedWatch tool, money markets are currently pricing in roughly a 35.8% chance of a Fed rate hike this month, alongside an 82.1% probability of at least a quarter-point hike in September.

Geopolitical tension continues to surge following reports that Yemen’s Iran-backed Houthi militant group attacked two Saudi oil tankers in the Red Sea for allegedly violating a blockade. In response, the US conducted its 13th consecutive night of military strikes on Iran.

Tensions escalated further after US President Donald Trump warned of “major military punishment” for both the Houthis and Iran if attacks continue, stating he is close to deciding on a massive, unprecedented military operation against Iran.