Silver dropped below $75 an ounce on Wednesday, extending a more than 5% plunge from the previous session, as renewed threats of US military strikes on Iran kept inflation fears elevated and pushed back expectations of any Federal Reserve rate relief through 2026.
Why silver is falling today
The immediate trigger is geopolitical. President Donald Trump warned on Tuesday that the US could resume strikes on Iran within two to three days if Tehran failed to accept Washington’s peace terms — comments that came shortly after he said he had called off a planned attack following appeals from Gulf allies. Iran’s nuclear programme remains the central obstacle in negotiations, and with no resolution in sight, the Strait of Hormuz has effectively remained closed to shipping traffic. Elevated oil prices from the supply disruption are feeding directly into inflation expectations, which in turn are pushing Treasury yields higher and strengthening the dollar — a combination that hits non-yielding precious metals hard.
Silver had also surrendered gains built earlier this month on optimism around AI-related demand, as data-centre infrastructure buildout drove expectations of stronger industrial metal consumption. Those gains are now gone.
Gold’s Tuesday slide sets the tone
Gold fell 1.4% to $4,503.98 per ounce in spot markets on Tuesday, touching its lowest level since March 30, while June futures settled 1% lower at $4,511.20. Benchmark 10-year US Treasury yields were near a more than one-year high. Edward Meir, analyst at Marex, pointed to a multi-country rise in real rates as the dominant pressure on gold, compounded by dollar strength. Higher yields raise the opportunity cost of holding gold; a stronger dollar makes dollar-priced commodities more expensive for international buyers — both forces working simultaneously against the metal.
Markets now see virtually no scope for Fed rate cuts through most of 2026, with expectations shifting toward no change or outright tightening later in the year as energy-driven inflation from the West Asia conflict keeps price pressures alive.
What the analysts are saying
Ole Hansen, head of commodity strategy at Saxo Bank, noted that while the structural investment case for gold remains largely intact, shorter-term macro developments have created a more challenging backdrop. He added that once immediate energy-related pressures begin to ease, central bank demand may re-emerge as the dominant driver of gold prices.
Tuesday’s session also dragged down the wider precious metals complex. Platinum fell 2.2% to $1,936.10, while palladium dropped 4.2% to $1,359.26. J.P. Morgan, in a forecast issued Sunday, sees platinum recovering to $2,400 per ounce and palladium reaching $1,600 per ounce by the fourth quarter of 2026.
The India angle
Precious metal price swings of this scale have direct consequences for India, the world’s second-largest gold consumer and a major silver importer. A sustained drop in silver prices provides relief to industrial buyers — particularly in solar panel manufacturing and electronics — while a weaker gold price, if sustained, typically spurs retail jewellery demand ahead of the wedding season. However, any rupee depreciation from the broader risk-off environment triggered by the Iran conflict can offset import price benefits for Indian buyers.
Market participants are now watching the minutes of the Federal Reserve’s latest policy meeting, due Wednesday, for signals on the rate trajectory.
This article is for informational purposes only and does not constitute investment advice. Please consult a qualified financial advisor before making any investment decisions.