Quick overview

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Silver (XAG/USD) is trading at about $68.50 on Friday, up 0.59 percent for the day, thanks to increased investor interest.

Market players remain cautious amid an unpredictable macroeconomic environment, despite this increase, keeping the white metal in a generally sideways trend. The geopolitical environment is a major motivator.

Hopes for a de-escalation in the Middle East are dwindling following reports that Iran did not ask for a halt to the US’s planned strikes on its energy infrastructure. This calls into question claims made by US President Donald Trump that attacks were delayed at Tehran’s request.

Financial market volatility fueled by the situation. Oil prices are high in this context because of the ongoing tensions surrounding the Strait of Hormuz. The outlook for monetary policy across major economies is changing, with rising energy prices and strengthening inflation. Investors are currently reevaluating the interest rate.

Silver, a non-yielding asset, is impacted by this change because rising bond yields raise its opportunity cost.  The US dollar’s (USD) strength, bolstered by higher rate expectations, is also limiting the metal’s upside by making it more costly for investors who do not hold dollars.

A still precarious near-term outlook is indicated by the fact that silver price action is dependent on the equilibrium between demand for safe havens and macroeconomic pressures related to inflation and interest rates.