Silver (XAG/USD) trades around $59.80 at the time of writing on Tuesday, up 2.81% on the day.
The white metal extends its rebound after hitting a low of $56.57 on Monday, benefiting from renewed demand for precious metals as investors monitor diplomatic developments between the United States (US) and Iran
Market sentiment has improved modestly after US Treasury Secretary Scott Bessent said that an agreement with Iran to reopen the Strait of Hormuz could be reached as soon as Tuesday or Wednesday. He added that Energy prices are expected to “settle back down” if a deal is reached. Following his comments, West Texas Intermediate (WTI) US Oil dropped more than 3% as investors priced in a gradual normalization of global Energy supplies.
The decline in Oil prices could also have important implications for US monetary policy. A prolonged drop in Energy prices would help ease inflationary pressures, reducing the need for the Federal Reserve (Fed) to tighten its monetary policy stance. Lower interest rate expectations typically weigh on the US Dollar (USD), providing additional support for non-yielding assets such as Silver.