Silver Price Forecast: XAG/USD falls below $50.50 following US attacks on Iran’s Qeshm Island

• The 11-month low of $48.87 may come back into view for Silver after covert US military strikes on Iran's Qeshm Island.
• With Middle East tensions and elevated energy prices fuelling inflation concerns, the probability of a December Fed rate rise stands at 73%.
• Precious metals face additional selling pressure from technology share liquidations and uncertainty surrounding the US midterm elections.

At around $50.30 per troy ounce in Tuesday’s Asian session, Silver (XAG/USD) is retreating after the previous day’s modest advance. The metal remains close to the 11-month low of $48.87 per ounce reached on 30 October, with concerns over oil supplies intensifying after a United States (US) attack on Iran’s Qeshm Island.

Monday’s raid forms part of a covert series of limited attacks that Washington has carried out against Iranian targets in recent weeks, according to a Wall Street Journal report citing US officials. The strikes follow remarks by US President Donald Trump playing down the prospect of a full-scale resumption of war with Iran after Tuesday’s midterm elections.

Iran’s Islamic Revolutionary Guard Corps (IRGC) intercepted and shot down two US MQM-170 drones south of Qeshm Island in the Strait of Hormuz, Iranian state media outlet Press TV reported. It also reported the destruction of a 55th US MQ-9 drone east of the strategically important waterway.

Rising energy costs and heightened inflation risks stemming from persistent Middle East hostilities have kept precious metals, including Silver, under selling pressure throughout the year. Central banks have responded by retaining a hawkish monetary policy stance. The CME FedWatch Tool currently indicates approximately a 73% probability of a US Federal Reserve interest rate rise in December.

Widespread asset liquidations across global markets followed a broader international sell-off in technology and artificial intelligence shares. Investors are also watching the US midterm elections, as high energy prices and concerns about inflation bring increasing political scrutiny to the Trump administration and the Republican Party.

US midterms draw market attention as Democrats build momentum

Tuesday’s US midterm elections are coming into focus as assessments of the political outlook increasingly favour the Democratic Party, according to strategists at Brown Brothers Harriman. In their assessment, “Democrats are widely expected to win the House of Representatives,” while “Senate control is much closer, but the tide favors the Democratic Party,” highlighting expectations that the balance of power in Congress could change.