Silver Lacks Direction

Silver prices swung between gains and losses around $80 per ounce on Monday as a correction in global energy markets and a retreat in US Treasury yields reduced the immediate demand for inflation-hedging assets. West Texas Intermediate crude dropping back toward $95 a barrel has effectively diminished the urgent risk premium that previously fueled the rally in precious metals. This shift is reinforced by the Federal Reserve being widely expected to maintain a restrictive policy stance during its meeting this week, which increases the opportunity cost of holding non-yielding metals. Despite these bearish drivers, silver maintains underlying support from a projected 67 million ounce supply deficit for 2026 and robust industrial demand from the electronics sector. Investors are balancing easing energy supply fears against the enduring appeal of silver as the Middle East conflict enters its third week ahead of the Fed's decision

Silver fell to around $80 per ounce on Monday, sliding for a fourth straight session as the Iran war entered its third week and oil prices remained volatile. Oil initially surged after the US attacked military targets on Iran’s main oil-export hub of Kharg Island over the weekend and threatened to strike energy infrastructure if Tehran interferes with transit through the Strait of Hormuz. Meanwhile, markets are weighing reports that the US will soon announce a coalition of countries to escort ships through the narrow waterway linking the Persian Gulf with global markets. Higher energy costs and rising inflationary pressures have reduced expectations that the US Federal Reserve and other major central banks will cut interest rates, a headwind for non-yielding precious metals. The Fed is widely expected to hold its policy rate steady this week, while central banks in the Eurozone, UK, Japan, Switzerland, Australia and Canada are also set to decide on monetary policy.

Silver prices retreated over 4% toward $80 per ounce on Friday as a resurgent US dollar amid fading expectations for interest rate cuts overshadowed the traditional appeal of precious metals. The dollar strengthened as investors sought safety after the United States military announced its largest wave of strikes yet against Iranian targets following the continued blockade of the Strait of Hormuz. While geopolitical instability typically drives demand for silver the prospect of slower economic growth and persistent inflation has limited its role as a store of value as investors favor the US dollar. Market participants have effectively removed expectations for multiple interest rate cuts in 2026 as crude oil prices climbing above $100 per barrel threaten to keep consumer costs elevated. This shift in monetary outlook makes non-interest bearing assets like silver less attractive compared to the safety of the greenback.