Silver Holds Advance as US-Iran Talks Progress

Silver traded above $77 an ounce on Tuesday after rising nearly 4% in the previous session, supported by indications that the US and Iran were moving closer to an agreement that could end the conflict and reopen the Strait of Hormuz. Negotiations between Washington and Tehran have reportedly centered on extending the ceasefire for roughly two months, during which the US would lift its blockade while Iran would allow shipping through Hormuz to resume. However, major obstacles remain, particularly over Iran’s nuclear program and its insistence on retaining control over maritime traffic in the strategic passage. Meanwhile, oil prices declined sharply, easing worries about inflationary pressures and the prospect of further interest rate hikes. Despite the recent rebound, silver prices are still down roughly 17% since the conflict began, as fears of an energy-driven inflation shock strengthened expectations that central banks could keep monetary policy tighter for longer.

Silver climbed toward $78 an ounce on Monday, recovering losses from last week as increasing optimism over a potential US-Iran agreement eased concerns about inflation and interest rate hikes. Reports indicated that the proposed deal could reopen the Strait of Hormuz, end hostilities, release some frozen Iranian assets, and lay the groundwork for additional negotiations aimed at restricting Tehran’s nuclear program. However, President Donald Trump said the US would keep its blockade of the Strait of Hormuz in place until a formal agreement is finalized. Despite Monday’s rebound, silver remains roughly 17% lower since the Middle East conflict began, as fears of an energy-driven inflation shock fueled expectations that central banks may need to maintain tighter monetary policy. Investors also continued to assess the outlook for Federal Reserve policy after Governor Christopher Waller signaled he no longer believed the central bank should retain an easing bias in its policy statement.

Silver prices declined to $75.7 per ounce on Friday, amid mounting inflation concerns driven by elevated oil prices and growing expectations of a US interest rate increase this year. Oil prices remained close to four-year peaks as investors doubted the likelihood of a breakthrough in US-Iran peace negotiations. According to Iranian media, Iran’s foreign minister met with Pakistan’s interior minister on Friday to discuss potential war-ending proposals, while US Secretary of State Marco Rubio acknowledged "slight progress" in mediated discussions but cautioned that Washington and Tehran had not yet reached a deal. The ongoing conflict and inflationary pressures have prompted markets to factor in a Federal Reserve rate hike before the end of the year, with approximately a 55% probability of at least one 25-basis-point increase by October. Fed Governor Christopher Waller added his voice to this view, stating that the central bank should abandon its easing bias in policy statements.