Silver Slips as Easing Geopolitical Risks Offset Weaker Dollar

Silver fell below $57 an ounce on Monday as easing geopolitical tensions weighed on demand for safe-haven assets, offsetting support from a weaker US dollar. Oil prices tumbled after optimism grew over renewed US-Iran negotiations, easing concerns about inflation and the prospect of higher-for-longer interest rates. US President Donald Trump said fresh talks with Iran would begin on Monday, although Tehran denied that negotiations with Washington were underway. Meanwhile, the US dollar weakened to its lowest level since mid-June after authorities intervened in the foreign exchange market to support the yen, limiting silver's losses. Investors are now awaiting a series of US labor market reports, including Friday's nonfarm payrolls data, for further clues on the Federal Reserve's policy outlook.

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.