XAG/USD is trading at $59.45, up 2.27%, driven by the collapse of oil prices and the weakness of the dollar, while the market awaits the Fed's decision.
The price of silver (XAG/USD) has recorded a rise of 2.27% on Monday, hovering around $59.45 per ounce. This increase occurs in a context of a sharp decline in oil prices, which has eased inflationary concerns and weakened the US dollar.
The precious metal directly benefits from the fall of West Texas Intermediate (WTI), which plummets nearly 8% during the day. The drop in energy prices reduces price pressures and lowers expectations that central banks will need to tighten their monetary policy.
This dynamic benefits non-yielding assets like silver, which generates neither interest nor dividends. When investors discount lower interest rates, the opportunity cost of holding these assets decreases, increasing their appeal.
Hopes for de-escalation between the United States and Iran have triggered the drop in oil prices. According to statements reported by Reuters, US Ambassador to the UN, Mike Waltz, stated that President Donald Trump has decided to suspend military attacks to allow more time for diplomacy. An Iranian official also claimed that Tehran would halt its attacks if Washington does the same.
This geopolitical shift has reduced the risk premium on crude oil and allowed market attention to focus on the Federal Reserve (Fed). On Wednesday, the US central bank will announce its monetary policy decision, and it is expected to keep interest rates unchanged.
Investors will scrutinise the agency's statement and the words of its chairman, Jerome Powell, for clues about the future of interest rates. A moderate tone could give a new boost to silver, while any indication of tightening could curb its rally.
In addition to oil, silver has benefited from the weakness of the dollar and the decline in US Treasury bond yields. A weaker dollar makes the metal cheaper for buyers using other currencies, stimulating demand.
For silver investors, the current scenario is favourable: lower inflation expectations, stable or declining interest rates, and a weakening dollar. However, short-term developments will largely depend on the message conveyed by the Fed on Wednesday.
Silver is used both as a safe haven and in industrial applications, especially in electronics and solar energy. Its dual nature makes its price sensitive to both macroeconomic factors and demand from the manufacturing sector.
For now, the white metal has accumulated a significant appreciation in recent sessions, and analysts are closely monitoring the $60 level, a psychological barrier that could act as resistance if the rally continues.
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