Silver Set for Sharp Monthly Drop

Silver rose above $72 per ounce on Tuesday as oil prices eased, but remained on track for a decline of more than 20% in March, marking its worst monthly performance since September 2011. Precious metals faced persistent pressure this month from an oil-driven inflation shock that pushed investors and policymakers toward a more hawkish interest rate stance. The Middle East conflict has now entered its fifth week with no signs of easing, as Iran has effectively closed the Strait of Hormuz and threatened to disrupt Red Sea shipping. Meanwhile, Jerome Powell said long-term US inflation expectations appear anchored despite heightened uncertainties linked to the conflict and noted that the central bank’s policy stance allows officials to gauge the economic impact of the Iran war.

Silver prices rose above $70.5 per ounce on Monday as the market balanced tentative optimism regarding a diplomatic resolution in Iran against the persistent threat of physical supply shortages and Houthi activity in the Red Sea. While President Trump cited serious discussions with a more reasonable regime to end the five-week conflict, silver remains sensitive to his warning that failure to reopen the Strait of Hormuz will lead to the obliteration of Iranian infrastructure. Despite the rebound the metal remains nearly 30% below its March peak as the energy shock to $115 Brent crude continues to stoke global inflation concerns and limit policy flexibility. A strengthening US dollar further caps gains by increasing costs for overseas buyers while investors pivot toward Treasuries as growth concerns from potential shortages begin to manifest. As the market awaits key US jobs data the trajectory for silver hinges on the current peace plan's success.

Silver reversed earlier losses to trade around $70 per ounce on Monday, remaining volatile as the Middle East conflict entered its fifth week with no clear resolution in sight. Hostilities in the region intensified as Iran-backed Houthi militants in Yemen joined the conflict, targeting Israel over the weekend. The militant group also has the capacity to strike vessels transiting the Red Sea and key Saudi Arabian energy infrastructure. Meanwhile, the US military is reportedly preparing for weeks of ground operations in Iran after additional troops arrived in the region. Silver is currently down almost 30% from its March peak as the oil price shock stoked inflation concerns and reinforced expectations for interest rate hikes from major central banks. Markets are now pricing in a potential rate increase from the Federal Reserve this year, a sharp reversal from earlier expectations for two rate cuts.