Silver prices surged past the $70 mark on Wednesday, extending a five-session winning streak as investors recalibrated inflation and interest-rate expectations following emerging US-Iran peace talks. Spot silver traded near $70.40 an ounce in Asian hours, building on a recovery driven by a sharp retreat in crude oil prices.
The rally is not purely a safe-haven move. Lower oil prices have alleviated concerns that the Middle East conflict would keep energy costs elevated, while traders await the Federal Reserve's first meeting under Chair Kevin Warsh to gauge the future pace of monetary policy.
Oil Relief Boosts Metals Sentiment
The immediate catalyst for silver's ascent is the shifting energy landscape. US and Iranian officials have signaled that an interim agreement could be signed on Friday, with a framework aimed at reopening the Strait of Hormuz and allowing Iranian oil to return to global markets. This prospect has pushed crude toward multi-month lows and softened the rate-hike narrative that had weighed on non-yielding assets.
“The pullback in oil prices has eased some upward pressure on interest rates and cooled rate-hike expectations,” said Ilya Spivak, head of global macro at Tastylive. Silver has benefited from the same logic as gold: when expected real yields decline, the opportunity cost of holding precious metals drops.
Trading Economics noted earlier this week that silver had jumped toward $71 after the peace announcement eased fears over energy-driven inflation. This dynamic has reignited bullish momentum, with traders now watching for a breakout above recent resistance levels.
Fed Decision Holds the Key
The rally remains vulnerable to the Fed's message. The US central bank is widely expected to hold its benchmark rate at 3.50%-3.75%, leaving investors focused on the statement, economic projections, and Warsh's press conference. Markets have trimmed some of their more hawkish bets since the peace headlines, but they have not abandoned the risk of another rate increase this year.
That makes the language around inflation especially critical. A firmer stance from Warsh could steady the dollar and cap further gains in silver, while a more patient tone may keep buyers in control. For context, silver's recent price action contrasts with earlier declines, as detailed in our analysis of silver dropping below $59 amid Iran tensions.
Supply Deficit Adds a Second Pillar
Silver also boasts a stronger fundamental story than many precious metals. The Silver Institute expects the market to remain in deficit for a sixth consecutive year in 2026, even as high prices encourage substitution in jewelry, silverware, and some industrial uses. Its February outlook projected a 67 million-ounce deficit this year, with physical investment demand rising 20% to a three-year high of 227 million ounces.
Industrial demand, however, is forecast to slip 2% to 650 million ounces as solar manufacturers thrift and substitute metal where possible. This split explains why silver can rally on softer Fed expectations while still trading with more volatility than gold. It is both a monetary asset and an industrial input, and this week the monetary side is setting the pace.
Investors are also eyeing broader market signals, such as Bitcoin holding $62K support and XRP open interest hitting $2.4B, as risk appetite shifts across asset classes.
This article is for informational purposes only and does not constitute financial advice.
