Silver Advances as Fed Uncertainty and Middle East Tensions

Silver surged more than 3% to around $59.5 per ounce on Tuesday, its highest level since July 10, as investors evaluated diplomatic efforts to ease US-Iran tensions and their implications for oil prices, inflation, and the Federal Reserve's policy outlook. US Treasury Secretary Scott Bessent said an agreement to reopen the Strait of Hormuz could be reached as soon as today or tomorrow, while Qatari Foreign Ministry spokesperson Majed al-Ansari said negotiations remain underway, with de-escalation and reopening the strategic waterway remaining the key priorities. The developments led markets to pare expectations for a September Fed rate hike, with the implied probability falling to 57%. Investors are now focused on upcoming US labor market data for further signals on the Fed's policy path. New York Fed President John Williams said inflation continues to move gradually lower but reiterated that the central bank stands ready to raise interest rates if price pressures persist.

Silver climbed to $59 an ounce on Tuesday, amid persistent uncertainty over the Federal Reserve's interest rate outlook and ongoing geopolitical tensions in the Middle East. New York Fed President John Williams said inflation remains on track to ease gradually but emphasized that the Fed stands ready to raise interest rates if price pressures persist. At the same time, the three policymakers who dissented from last week's decision to leave rates unchanged reiterated that further monetary tightening is warranted. Markets are currently pricing in a 63% probability of a September rate hike, with attention now shifting to upcoming US labor market data. Meanwhile, conflicting signals from the US and Iran over negotiations to end the conflict continued to fuel geopolitical uncertainty, reinforcing demand for safe-haven assets such as silver.

Silver steadied around $58 an ounce on Tuesday after rising in the previous session, as investors tracked developments in US-Iran talks for clues on the potential reopening of the Strait of Hormuz, while continuing to evaluate the outlook for US Federal Reserve monetary policy. President Donald Trump said his offer of talks represents Tehran’s final opportunity to reach a deal and expressed confidence that Hormuz will reopen soon. Iran, however, denied that any direct talks with the US are underway, though it said discussions with Oman aimed at increasing shipping through the strait are making progress. Meanwhile, markets are pricing in about a 65% chance of a 25 basis point Fed rate hike in September after the central bank left interest rates unchanged in July. Bank of New York Fed President John Williams said monetary policy remains well positioned, adding that inflation is expected to ease during the second half of the year.