Silver Gains as Markets Watch US-Iran Talks

Silver climbed above $58 an ounce on Monday, recovering losses from the previous session after President Donald Trump said peace talks with Iran will resume today, sending oil prices lower and easing concerns over inflation and the interest rate outlook. Trump said key Middle Eastern allies, including Saudi Arabia, urged him to suspend planned strikes and pursue a diplomatic agreement instead, while reiterating his call for the swift reopening of the Strait of Hormuz. Investors also turned their focus to a packed week of US labor market data, highlighted by Friday’s closely watched monthly jobs report. Last week, the Federal Reserve left interest rates unchanged, although three officials dissented, warning that delaying action for too long could eventually require more aggressive policy tightening. Markets are currently pricing in about a 68% chance of a 25 basis point Fed rate hike in September.

Silver fell more than 2% to around $57.5 an ounce on Friday, ending July down over 1% as the US dollar rebounded from a more than one-month low and expectations for tighter Federal Reserve policy outweighed support from softer US inflation data and unchanged interest rates. Markets currently see about a 65% chance of a Fed rate hike in September, with another increase expected by June 2027. While Fed Chair Kevin Warsh reaffirmed the central bank's commitment to lowering inflation without signaling an imminent hike, the three policymakers who dissented at this week's meeting reiterated on Friday that further tightening is needed. Meanwhile, renewed US strikes on Iranian targets in response to Tehran's attacks on American assets reduced hopes for a diplomatic breakthrough. Since the conflict erupted in late February, higher oil prices have fueled inflation concerns and reinforced expectations for higher interest rates, weighing on precious metals.

Silver fell toward $58 an ounce on Friday, snapping a two-session winning streak, but was still on track to end July little changed after a more than 20% decline in June. The precious metal found support this week after the US Federal Reserve left interest rates unchanged despite mounting inflationary pressures stemming from renewed hostilities in the Middle East. However, expectations for tighter monetary policy continued to cap gains, with markets currently pricing in about a 63% chance of a Fed rate hike in September. Meanwhile, the US military launched fresh strikes on Iranian targets in retaliation for Tehran’s attacks on US assets across the Middle East, reducing the likelihood of any near-term diplomatic agreement. Precious metals have come under constant pressure since the US-Iran war erupted in late February, as surging oil prices fueled inflation concerns and strengthened expectations for tighter monetary policy.