Silver Resumes Downward After Iran Denies De-escalation Talks
Silver prices (XAG/USD) resumed their downward trend on Tuesday (March 24th) after a strong recovery in the previous session. Pressure arose after Iran dismissed reports of talks with the United States regarding a resolution to the Middle East war, fading hopes for a de-escalation that had calmed the market. In recent trading, XAG/USD fell around 3.2% to $66.90.
Iranian officials downplayed the possibility of negotiations with the US after Parliament Speaker Mohammad Bagher Ghalibaf stated that no talks had taken place. The Iranian Foreign Ministry also reiterated that Tehran's position on the Strait of Hormuz and the conditions for ending the war remain unchanged. Iran has reportedly not responded to messages from other countries regarding US requests to open talks, according to the IRNA news agency.
Prior to Iran's clarification, US President Donald Trump had stated via Truth Social that he instructed the Department of Defense to postpone for five days a scheduled attack on Iranian power plants. Trump claimed Washington had "very good and productive" conversations with Tehran toward a "complete and total resolution" of hostilities in the Middle East. However, Iran's denials have shaken market sentiment again.
In theory, heightened geopolitical tensions typically increase the appeal of safe-haven assets like precious metals. However, silver (and other precious metals) underperformed as surging energy prices stemming from the Middle East conflict fueled inflation concerns, dampening speculation that global central banks would cut interest rates this year. A hawkish stance, or a prolonged hold on interest rates, is typically detrimental to non-yielding assets like silver.
From a currency perspective, the recovery in the US dollar also weighed on silver prices. A stronger dollar makes USD-denominated silver more expensive for buyers outside the US, and technically makes the risk-reward ratio less attractive. The dollar index (DXY) strengthened by about 0.25% to 99.40 after bouncing off a weekly low of 98.88 recorded on Monday.
Newsmaker's Bottom Line: Silver was hit by a combination of geopolitical headlines that once again "erased" hopes of de-escalation, a strengthening dollar, and the narrative of prolonged high interest rates due to the oil shock. As long as the market continues to price in energy inflation and the chances of a rate cut narrow, silver has the potential to remain volatile and vulnerable to further pressure.
Source: Newsmaker.id
