XAG/USD rises 4% after a US-Iran peace deal eases Middle East tensions, reducing oil prices and inflation fears.
Silver prices surged 4% to near $70.80 in Asian trading on Monday after the US and Iran reached a peace deal, reopening the Strait of Hormuz. The move triggered a 4.8% drop in WTI oil prices to $78.85, the lowest in over three months, easing inflation concerns tied to Middle East supply risks.
Higher oil prices in recent months had stoked inflation fears, prompting traders to scale back expectations for dovish central bank policies. This shift had weighed on non-yielding assets like silver, but the latest geopolitical developments reversed the trend.
Investors are now focused on the Federal Reserve’s upcoming policy announcement, where rates are expected to remain unchanged at 3.50%-3.75%. Silver’s near-term bias remains mildly bearish despite the rally, as it trades below its 20-day moving average.