Silver eased toward $85 an ounce on Tuesday, pulling back from a sharp rally in the previous session as geopolitical uncertainty deepened following President Donald Trump’s latest remarks on the US-Iran ceasefire negotiations.
Trump said the ceasefire was on “massive life support” after rejecting Tehran’s latest peace proposal — language that dashed hopes of a near-term resolution to the conflict and kept fears alive that the Strait of Hormuz, one of the world’s most critical oil shipping corridors, could remain effectively constrained for an extended period. The remarks pushed crude oil prices higher and sustained inflation concerns across global markets, weighing on risk appetite even as safe-haven demand remained elevated.
What drove silver’s 7% surge on Monday?
Silver had surged more than 7% to a two-month high in the previous session, significantly outperforming gold and other precious metals. The rally was driven by a combination of silver’s dual identity — its safe-haven appeal as a precious metal and its significant industrial demand profile, which sets it apart from gold in periods of supply disruption anxiety.
Silver is a critical industrial input across solar panels, electric vehicle components, electronics, and medical devices. The prolonged Middle East conflict and Strait of Hormuz disruption have raised concerns about supply chain constraints and broader commodity inflation, which tends to boost expectations for physical industrial silver demand alongside its investment appeal. This dual demand driver explains why silver’s Monday move was sharper than gold’s more modest gains.
What is the market watching next?
Investors are closely tracking the latest US consumer inflation data, which will provide signals on how the Iran conflict is feeding through into broader price pressures in the world’s largest economy. Elevated energy prices — with crude remaining near $126 per barrel — have a well-established transmission mechanism into headline CPI through fuel, freight, and manufacturing costs. A hotter-than-expected inflation print would reinforce the case for a prolonged pause in Federal Reserve rate cuts, which typically exerts upward pressure on the dollar and downward pressure on commodity prices including silver and gold.
For India specifically, silver’s elevated global price translates directly into higher MCX rates — silver was trading at ₹2,81,747 per kg on MCX on May 12 — adding to the import bill pressure that has already prompted PM Modi’s austerity appeal around gold and fuel consumption.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to consult a registered financial advisor before making any investment decisions. Business Upturn does not hold any position in the securities mentioned.