Silver (XAG/USD) fell after opening with a gap up, but stayed in positive territory and traded near $75.40 per troy ounce during Asian hours on Monday. Daily gains eased as demand for safe-haven assets softened while traders assessed progress in US–Iran peace talks.
Bloomberg reported on Sunday that Donald Trump said the United States will start guiding neutral ships trapped in the Persian Gulf out through the Strait of Hormuz from Monday. The plan aims to help civilian vessels from non-aligned countries leave the area and return to normal operations.
Diplomatic efforts have continued as the conflict in Iran enters its third month. Iran said it is reviewing Washington’s response to its latest 14-point proposal, while Bloomberg reported that Trump said Tehran’s proposal may not meet expectations.
Axios reported, citing sources familiar with the matter, that Iran proposed a one-month deadline for talks. The talks would aim to reopen the Strait of Hormuz and end the US naval blockade, as well as conflicts in Iran and Lebanon.
Silver also faced pressure because the Middle East conflict has pushed energy prices higher and raised inflation risks. This has increased concern that central banks may keep interest rates high for longer or tighten policy.
We remember how silver prices reacted to the US-Iran peace talks this time last year, in 2025. The easing of that conflict saw silver retreat from its peak above $75 as the safe-haven bid faded. Today, with silver trading near $58, the market is far less concerned with an imminent military escalation in the Persian Gulf.
The main headwind for silver has shifted from geopolitics to monetary policy, a dynamic that began with the inflation spike during the 2025 energy crisis. With the Federal Reserve holding rates at 4.75%, the opportunity cost of holding non-yielding silver remains high. However, recent data showing inflation cooling to 2.8% has led markets to price in a greater than 60% chance of a rate cut before the fourth quarter.
This creates an opportunity in the options market where implied volatility seems low compared to the potential for a policy surprise. We believe traders should consider buying long-dated call options to position for a dovish pivot from the Fed later this year. This provides leveraged upside exposure to silver if interest rate expectations shift favorably.
We are also watching the price of WTI crude oil, which has stabilized around $85 a barrel after spiking over $110 during the 2025 blockade. Any renewed disruption to shipping in the Strait of Hormuz would likely see oil prices jump again, reigniting inflation fears and creating complex cross-currents for silver. This makes a pairs trade, such as going long silver futures while buying puts on an oil ETF, an interesting hedge against a sudden risk-off event.
