Silver Rises, Fed and Hormuz Leading the Way
Silver prices hovered around US$70 per ounce in European trading on Tuesday (June 16th), following a strong rally in the previous session. Spot silver was at around US$70.29 per ounce, while Comex silver futures had previously risen 3.25% to US$70.066 per ounce. This strengthening occurred after the preliminary US-Iran agreement eased concerns about a surge in energy inflation.
The main catalyst came from the planned reopening of the Strait of Hormuz. The interim US-Iran agreement is scheduled to be signed in Switzerland on Friday, with President Donald Trump stating that oil flows from the Persian Gulf would return to normal once the deal takes effect. If Hormuz is reopened, oil price pressures could ease and the risk of energy inflation would also decrease.
For silver, the fundamental transmission is similar to that of gold. Lower oil prices can suppress inflation expectations and reduce the likelihood of central banks raising interest rates aggressively. This supports the precious metal, as a weaker dollar and yields typically make silver more attractive to global investors.
However, the market remains cautious as Washington and Tehran have not yet released the official text of the memorandum. Details regarding the Hormuz reopening, shipping security, and technical implementation remain at risk. Therefore, silver's movement near US$70 remains potentially volatile ahead of Friday's signing.
The next focus is on this week's Federal Reserve decision. The Fed is expected to keep interest rates unchanged, but the market will be closely monitoring new Chairman Kevin Warsh's tone regarding inflation and the interest rate outlook. If the Fed sounds hawkish, silver could be held back; conversely, a more balanced signal could help maintain the precious metal's momentum. (Arl)
Source: Newsmaker.id
