Silver (XAG/USD) has extended its losses for the third consecutive day, trading around $72.20 per troy ounce during Asian hours on Monday [1]. The decline is attributed to a combination of escalating Middle East tensions, which have driven energy prices sharply higher, and reinforced hawkish expectations for major central banks’ policy outlooks [1]. Despite increased geopolitical risks, silver has not benefited from safe-haven demand, as forced liquidations have pressured the metal while investors cover losses in other markets [1].
US President Donald Trump issued a new ultimatum to Iran, threatening strikes on power plants and civilian infrastructure if the Strait of Hormuz is not reopened, with a deadline set for Tuesday at 8 PM Eastern Time. Tehran has rejected the ultimatum and continues attacks on energy assets across the Middle East [1]. These developments have contributed to market uncertainty and higher energy prices, further influencing central bank policy expectations.
Markets are increasingly pricing in a delay to US Federal Reserve (Fed) rate cuts, with the possibility of higher borrowing costs later this year if inflation remains persistent [1]. Investors are now awaiting the latest Federal Open Market Committee (FOMC) Meeting Minutes for clearer signals on the Fed's policy path [1]. Meanwhile, the Bank of England (BoE) unanimously kept its Bank Rate unchanged at 3.75% in March, pausing its easing cycle amid rising inflation risks linked to higher energy costs. Some analysts expect rate cuts to be pushed back until late 2026 or even 2027, while others warn that a pre-emptive rate hike remains possible if inflation expectations become unanchored [1]. European Central Bank (ECB) President Christine Lagarde and other Governing Council members have reiterated that policy will remain restrictive until inflation sustainably returns to the 2% target [1].
The combination of hawkish central bank outlooks and geopolitical instability has weighed heavily on silver prices, with the metal failing to attract safe-haven flows despite its historical role as a store of value [1].
CONCLUSION
Silver prices are under significant pressure due to hawkish central bank policy expectations and heightened geopolitical risks, particularly in the Middle East. The market is closely watching upcoming Fed communications for further guidance, while analysts anticipate prolonged restrictive monetary policy across major economies. The outlook for silver remains bearish in the near term as these factors continue to dominate investor sentiment.