Silver climbs over 4% on Middle East peace hopes

Silver prices jumped more than 4% in European trading on Monday, resuming gains that were temporarily halted in the previous session and moving toward recording their highest level in several weeks, supported by the decline of the US dollar and falling global oil prices, following major progress in peace negotiations between the United States and Iran.

Lower oil prices are helping ease concerns over accelerating inflation, potentially giving the Federal Reserve more room to keep interest rates unchanged in the near term, while expectations continue to grow for eventual rate cuts over the longer term.

Price Overview

Silver prices today rose by 4.35% to $78.83, from the opening level at $75.55, while recording a session low at $75.54.

At Friday’s settlement, silver prices lost 1.5%, marking their first decline in the past three sessions, due to a stronger dollar and rising oil prices.

Silver prices also declined 0.55% last week, recording a second consecutive weekly loss, amid mounting inflationary pressures in the United States and rising US Treasury yields.

US Dollar

The US Dollar Index fell 0.4% on Monday, pulling away from a six-week high at 99.52 points and heading toward its first loss in three sessions, reflecting broad weakness in the US currency against a basket of global currencies.

Beyond profit-taking activity, the dollar weakened amid improving risk appetite across global markets, driven by growing hopes that the United States and Iran are nearing a peace agreement that could end the war in the Middle East.

Global Oil Prices

Oil prices fell more than 6% at the start of the week, reaching their lowest levels in three weeks, as fears over supply disruptions from the Gulf region eased, while expectations increased that the Strait of Hormuz could soon reopen to oil tankers.

Developments in the Iran War

The United States and Iran are reportedly close to reaching a final agreement framework to end the war in the Middle East.

Trump stated that a large portion of the draft agreement “has already been negotiated,” though it has not yet been fully finalized, adding that “time is on Washington’s side” to secure a “good and appropriate” deal.

Sources said the agreement framework includes extending the ceasefire for 60 days, giving negotiators time to draft the final and detailed terms needed to permanently end the war.

The agreement also reportedly includes reopening the Strait of Hormuz, alongside a US decision to end its naval blockade on Iranian ports and allow Iran to sell oil under specific exemptions.

Sources added that several contentious issues remain unresolved, including oversight of the Strait of Hormuz, Iran’s complete abandonment of highly enriched uranium, and the release of frozen Iranian assets.

US officials said the agreement will not be signed on Monday and that final approvals could still take several days.

Tasnim News Agency warned that the draft agreement could collapse over disputes related to frozen Iranian assets.

US Interest Rates

Kevin Warsh was sworn in as Chairman of the US Federal Reserve on Friday.

According to the CME FedWatch Tool, markets are currently pricing in a 52% probability of a Federal Reserve interest rate hike in December, compared to just over 16% at the beginning of May.

Markets are also fully pricing in a 100% probability that US interest rates will remain unchanged at the June meeting, while the probability of a 25 basis point rate cut remains at zero.

To reassess those expectations, investors are closely monitoring additional US economic data releases, alongside comments from Federal Reserve officials.