Silver prices (XAG/USD) declined after two consecutive days of gains, trading around $76.10 per troy ounce during Asian hours on Friday [1]. The metal's subdued performance is attributed to rising expectations of a hawkish Federal Reserve policy stance, as elevated energy prices linked to the Strait of Hormuz could feed into core US consumer prices and inflation expectations, potentially prompting the Fed to maintain higher interest rates [1]. Additionally, a stronger US economic growth outlook is reinforcing the case for monetary tightening, further pressuring non-interest-bearing assets like silver [1].
Federal Reserve officials are currently holding the federal funds rate steady but are moving away from the idea of rate cuts, with some policymakers increasingly open to raising rates if inflation does not subside [1]. This cautious approach by the Fed is contributing to the downward pressure on silver prices [1].
Geopolitical uncertainty also plays a role, as ongoing US-Iran peace negotiations have kept investors wary regarding inflation risks and the interest rate outlook [1]. US Secretary of State Marco Rubio mentioned encouraging signs of a possible deal with Iran, with Pakistani mediators expected to visit Tehran and Iranian officials reviewing Washington’s latest proposal [1]. However, senior Iranian officials clarified that no official deal has been reached, though the gaps between the two nations have narrowed [1]. According to Reuters, Iran’s Supreme Leader Mojtaba Khamenei identified uranium enrichment and Tehran’s control over the Strait of Hormuz as major sticking points in the negotiations [1].
Furthermore, Iran is reportedly negotiating with Oman to implement a permanent toll system to formalize its authority over shipping traffic in the Strait of Hormuz, a proposal that former President Donald Trump has firmly rejected [1].
CONCLUSION
Silver prices remain under pressure due to a combination of hawkish Federal Reserve sentiment and ongoing uncertainty in US-Iran negotiations. The market is closely watching both monetary policy signals and geopolitical developments, with no clear resolution in sight for either factor.