Silver Falls as Rate Hike Expectations Weigh

Silver fell toward $49 an ounce on Tuesday, erasing gains from the previous session as investors weighed signs of diplomatic progress between the US and Iran that sent oil prices lower and eased inflation concerns. US President Donald Trump indicated progress in negotiations, while Iranian President Masoud Pezeshkian said his government had been given greater authority by the country's supreme leader to pursue peace talks. Silver has faced constant pressure this year as the conflict in the Middle East drove energy prices higher and fueled inflation, prompting central banks to raise interest rates. A global selloff in technology and AI stocks also triggered widespread liquidations, adding further pressure on precious metals markets. Meanwhile, investors are closely watching the US midterm elections, as the Trump administration and Republican Party face growing political pressure over elevated energy costs.

Silver jumped around 4% to $50.80 an ounce on Monday, rebounding from 11-month lows, as declining oil prices eased inflation concerns, while investors shifted their focus to the November 3 US midterm elections. Precious metals had faced heavy selling pressure on Friday as a sharp selloff in technology and AI stocks triggered a dash for cash, forcing investors to liquidate safe-haven holdings. However, optimism surrounding a potential US-Iran diplomatic breakthrough, coupled with renewed doubts about the sustainability of the AI boom, has prompted some reassessment of the Federal Reserve's tightening outlook. Meanwhile, oil prices tumbled after Iranian and Qatari officials held a third consecutive day of talks aimed at securing an end to the US-Israeli war on Iran. Lower energy prices could help contain inflationary pressures and ease expectations of interest rates remaining higher for longer, reducing the opportunity cost of holding non-yielding assets such as silver.

Silver climbed toward $50 an ounce on Monday, recovering modestly from near one-year lows as declining oil prices eased concerns over inflation and potential interest rate increases. Oil prices declined amid signs of ongoing diplomatic efforts to prevent renewed US military action against Iran following the midterm elections. President Trump had previously threatened to resume strikes against Iran after the vote, while Tehran warned of broader retaliation. Meanwhile, investors are awaiting this week’s closely watched US jobs report for further insight into the Federal Reserve’s monetary policy outlook, with markets currently assigning around a 75% probability of a rate hike in December. Last week, silver faced significant selling pressure as persistent concerns over energy-driven inflation strengthened expectations of further Fed rate increases. A broader global equity selloff fueled by AI concerns also prompted investors to liquidate silver holdings to cover losses in other assets.