Silver Rebounds Sharply

Silver prices rebounded above $70 on Monday as a potential diplomatic opening between the US and Iran triggered a sharp recovery across precious metals. The metal had earlier plunged toward $61 to hit its lowest level since mid-December as surging oil prices and hawkish central bank signals fueled a massive liquidation event. However the announcement of a five day pause in planned strikes on Iranian energy infrastructure provided a much needed reprieve for non-yielding assets. While Tehran has dismissed reports of productive talks, the move by the US administration suggests a growing focus on limiting the energy-led inflation that has pressured global risk appetite. Consequently the safe haven premium for silver is being re-evaluated as traders weigh the possibility of joint control over the Strait of Hormuz.

Silver pared early losses to trade at $67 per ounce on Monday, after President Trump delayed strikes on Iran for five days, citing "productive conversations" with Tehran. However, Iran’s Fars News Agency denied any negotiations, attributing Trump’s move to Iran’s threat to strike all West Asian power plants. The metal remained near its lowest since December, extending a sharp downturn driven by soaring oil prices and inflation fears. Last week, silver crashed over 15% as markets braced for prolonged monetary tightening, including a possible Fed rate hike by year-end. The ECB, BoE, and BoJ also held rates but warned of further tightening if inflation persists.

Silver dropped as much as 4.8% toward $64 per ounce on Monday, extending its selloff into a fourth week as the ongoing Middle East conflict intensified inflation fears, while major economies face pressure to boost liquidity to offset the war’s impact. The Iran war shows little sign of easing, with President Donald Trump threatening strikes on Iranian power plants if the Strait of Hormuz is not reopened, while Tehran warned it would target key US and Israeli assets across the region if its energy facilities were hit. Last week, silver declined over 15% as surging oil prices fueled inflation concerns, prompting markets to price in a prolonged pause or potential rate hikes from major central banks. Traders are increasingly betting on a possible Federal Reserve rate increase toward year-end amid fears of persistent inflation. The ECB, BOE and BOJ also kept rates unchanged last week but signaled readiness to tighten policy further if inflationary pressures persist.