Financial markets remained volatile on Monday as geopolitical tensions in the Middle East, particularly the ongoing US-Iran conflict, weighed heavily on sentiment and asset prices. Silver (XAG/USD) traded sideways around $73, with modest US Dollar softness cushioning the downside, but upside was capped by rising Oil prices and inflation concerns, reinforcing expectations that the Federal Reserve will keep interest rates higher for longer [1]. Gold (XAU/USD) consolidated near $4,660, little changed on the day but lower than Friday’s close, as risk aversion dominated market sentiment. The mood fluctuated with headlines about Iran war negotiations, but a quick resolution appeared unlikely after US President Donald Trump reiterated that the Tuesday deadline for reopening the Strait of Hormuz is final, and the latest Iranian proposal was deemed insufficient [2].
Iran rejected a draft ceasefire proposal assembled by Egyptian, Pakistani, and Turkish mediators, with Iranian officials calling the 45-day framework "illogical" and demanding a permanent end to the war with guarantees against future attacks [3]. Despite the hawkish tone from Tehran, the US Dollar Index (DXY) failed to catch a meaningful safe-haven bid, settling around 100.00 after intraday volatility. Equities closed comfortably in the green, even as Oil prices remained elevated above $112 per barrel on West Texas Intermediate (WTI) [3].
US economic data added to the uncertainty. The Institute for Supply Management (ISM) Services PMI for March came in at 54, below the consensus of 55 and down from 56.1 in February [2][3]. The Employment Index dropped sharply to 45.2 from 51.8, its lowest since December 2023, indicating a softening labor market [2][3]. Meanwhile, the Prices Paid Index surged to 70.7 from 63, reflecting mounting inflationary pressures, with ISM respondents citing higher fuel costs and Iran-related supply disruptions as dominant themes [2][3]. The New Orders Index rose to 60.6 from 58.6, its best reading since February 2023 [3]. This combination of weakening employment, resilient demand, and surging input costs signals stagflation risks and complicates the Federal Reserve's policy outlook [3].
Technical analysis across precious metals showed a bearish-to-neutral outlook. Silver faced repeated rejection near the 100-day SMA at $75.84, with resistance at $82.35 and major upside barrier at $96.62. Immediate support lies in the $70-$68 zone, followed by the March low near $61.01 [1]. The RSI for Silver stood at 43, indicating persistent but not extreme selling pressure, while MACD was slightly positive but near zero, suggesting fading downside momentum [1]. Gold's short-term outlook was mildly bearish, with price retreating from the $4,780 area and holding below key moving averages. The Momentum indicator slipped into negative territory, and the RSI eased back toward 50, signaling cooling buying pressure and sellers attempting to gain short-term control [2].
Looking ahead, market participants are focused on upcoming US inflation data releases. The Federal Open Market Committee (FOMC) Minutes, February Personal Consumption Expenditures Price Index (PCE), Q4 GDP, Initial Jobless Claims, and March Consumer Price Index (CPI) are expected to provide further clarity on inflation and growth dynamics, potentially influencing Federal Reserve policy decisions [3].
CONCLUSION
Geopolitical tensions and Iran's rejection of the ceasefire proposal have heightened volatility across precious metals and the US Dollar, with inflation concerns and weak employment data adding to market uncertainty. Technical indicators suggest a bearish-to-neutral outlook for both Silver and Gold, while upcoming US inflation data will be closely watched for further direction. The market impact remains high as traders await clarity on both geopolitical developments and Federal Reserve policy.