Silver prices have risen to about $36.10 early Monday during Asian trading. This increase follows the U.S. attacks on Iran’s nuclear sites, which have raised tensions in the Middle East. Iran’s promise to respond has made the markets nervous. If things escalate, demand for safe-haven assets like silver could rise. U.S. President Trump has warned that any retaliation from Iran will lead to a stronger response.

Fed’s Potential Influence

Officials from the U.S. Federal Reserve, including Governor Waller, have suggested possible interest rate cuts as early as July. This outlook has supported silver prices because lower rates can make the metal cheaper for foreign buyers. However, the renewed strength of the U.S. Dollar might limit how much silver prices can grow. Investors are looking forward to the preliminary U.S. S&P Global PMI for June. Strong data from the U.S. could strengthen the Dollar in the near future. Silver is used in many industries due to its excellent electrical conductivity. Changes in industrial demand can affect its price, as silver is widely used in electronics, solar energy, and is also tied to gold. Silver prices often follow gold’s movements, influenced by similar factors like economic stability and geopolitical issues. The recent surge in silver prices to around $36.10 reflects two key issues: geopolitical unrest and changes in monetary policy. With attacks on critical sites in Iran and warnings from Tehran, safe-haven assets are absorbing the market’s shock. Silver benefits from increased political risk, as it serves both as a store of value and an industrial metal. As seen early Monday, these trends continue, and market anxiety is growing. From Washington, the language has become more cautious. President Trump’s strong warnings about retaliation suggest that any further actions could quickly escalate the situation. As a result, market volatility has increased, with silver becoming a popular option for those seeking protection against potential losses. Traders should watch for possible price increases if tensions worsen, especially if reports become more direct or actions in the region resume.

Monetary Positioning and Market Dynamics

At the same time, monetary positioning is providing additional support. Governor Waller and others at the Federal Reserve have left the possibility of rate cuts open for July. Lower interest rates increase the appeal of holding metals like silver, which do not earn interest. This environment is slightly favorable for metals due to easing inflation, encouraging more buying. Yet, it’s not all one-way movement. The Dollar has shown some strength, which can limit gains in USD-denominated commodities. If the upcoming S&P Global PMI data is better than expected, the Dollar could rally, putting further upward pressure on silver prices in the short term. This creates a mixed situation where the demand for safe-haven assets is rising, but a stronger Dollar could counteract that. From a strategic viewpoint, silver is sensitive not only to market sentiment but also to changes in manufacturing demand. It is heavily used in electronics, solar panels, and clean energy processes. Any decline in demand in these areas will have an impact on prices. We will also be monitoring gold, as their price movements are often linked and respond similarly to broader economic signals. We will keep an eye on guidance from the Fed at upcoming speaking events and monitor physical silver delivery trends. Stronger flows into ETFs or tighter spreads in dealer markets could suggest capital is shifting toward metals for the medium term. Currently, near-term options skews are low, indicating traders may not be fully prepared for sudden moves. Adjusting risk exposure while markets are sensitive to news could be wise. As events unfold in the Middle East and among central bankers, staying alert to cross-market signals is crucial. While the silver market typically reacts quickly, broader trends often take longer to adjust. Create your live VT Markets account and start trading now.

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