Silver price declines as failed US-Iran talks lift Dollar, Oil-fueled inflation worries

Silver (XAG/USD) trades around $74.10 on Monday at the time of writing, down 2.23% on the day after briefly dropping to an intraday low near $72.61. The white metal is attempting to stabilize its losses but remains under pressure as the US Dollar (USD) strengthens amid rising geopolitical tensions.

Market sentiment deteriorated after peace negotiations between the United States (US) and Iran failed over the weekend. Talks aimed at establishing a lasting ceasefire in the Middle East did not succeed, as Tehran refused to abandon its nuclear ambitions. In response, US President Donald Trump announced military measures aimed at blocking maritime traffic linked to Iranian ports, particularly around the Strait of Hormuz, a key route for global energy flows.

This escalation has revived concerns about global energy supply and triggered a sharp rebound in Oil prices. West Texas Intermediate (WTI) is rising strongly and trades around $97 per barrel, fueling renewed inflation fears across financial markets.

Higher energy prices are pushing investors to reassess expectations regarding the monetary policy of the Federal Reserve (Fed). Markets are now considering the possibility that interest rates could remain higher for longer, or even rise further if geopolitical tensions continue to drive inflationary pressures.

In this environment, non-yielding assets such as Silver tend to lose relative appeal. A higher interest-rate backdrop increases the opportunity cost of holding precious metals, limiting demand despite ongoing geopolitical uncertainty.

On the macroeconomic front, the calendar remains relatively light at the start of the week. Investors’ attention will turn to the release of the US Producer Price Index (PPI) on Tuesday, which could provide further clues about the evolution of inflationary pressures and the next steps in the Fed’s monetary policy.