Silver is struggling to find its footing on Tuesday, hovering near $87.20 per troy ounce as a resurgent US Dollar continues to weigh on the metal despite growing geopolitical anxiety across the Middle East.
The grey metal has now logged back-to-back losing sessions, caught in a familiar trap where safe-haven buying gets absorbed by dollar strength. Since silver is priced in USD globally, a stronger greenback makes the metal pricier for foreign buyers, naturally cooling demand just as tensions heat up.
The conflict driving that anxiety escalated sharply over the weekend. US military officials confirmed Tuesday that joint Israeli-American strikes have taken out Iranian Revolutionary Guard command infrastructure, air defense networks, and missile launch positions since Saturday's offensive began. Iran wasted no time responding — a senior IRGC adviser declared the Strait of Hormuz closed, warning that any vessels attempting passage would face destruction by Iranian naval forces.
The Hormuz threat isn't being taken lightly. The strait handles roughly 20% of global oil flow, and markets reacted immediately — crude spiked, energy inflation fears resurfaced, and bond traders adjusted their positions accordingly.
The 10-year Treasury yield jumped to 4.07%, gaining 10 basis points in a single session. Higher yields raise the opportunity cost of holding non-interest-bearing assets like silver, effectively capping any safe-haven rally the metal might have enjoyed.
Fed rate cut expectations have already shifted in response. Traders now see July as the earliest realistic window for the first cut, pushed back from June. Markets still anticipate two 25 basis point reductions this year, but the timeline is under pressure as energy-driven inflation complicates the Fed's calculus.
Until dollar momentum fades or Treasury yields pull back, silver looks likely to remain on the defensive.
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