Silver declined on Tuesday as markets reacted to renewed geopolitical tensions in the Middle East. Reports of attacks on commercial vessels in the Strait of Hormuz raised concerns that the recently agreed US-Iran interim deal could come under renewed pressure.
The developments pushed oil prices higher to some extent, lifting global bond yields as traders reassessed inflation risks.
Further escalation could endanger the prospects for a diplomatic resolution and could prove particularly challenging for silver.
Higher energy prices would likely reinforce inflationary pressures, encouraging major central banks to tighten monetary policies, supporting higher yields and reducing silver’s appeal.
However, the metal’s longer-term fundamentals remain constructive. Structural demand from electrification, renewable energy, AI infrastructure and data centers, electronics, and automotive manufacturing continues to provide an important source of support. The market is also expected to remain relatively tight, amid forecasts of a supply deficit this year.