Silver price (XAG/USD) declined by almost 1%, trading slightly below $58.00 during the Asian session on Wednesday, as investors grew cautious regarding the sustainability of peace between the United States and Iran. This caution was triggered after Washington refused to meet directly with Tehran, despite reaching Oman for negotiations, and instead opted to only meet with mediators. The negotiations, which continued in Doha on Tuesday, centered around Iran's demand for a toll system near the Strait of Hormuz—a critical passage for nearly 20% of global energy supply. The US team's refusal to meet with Iranian negotiators has perpetuated uncertainty over whether global shipping could continue using the chokepoint without incurring fees [1].
This ongoing uncertainty has the potential to lift oil prices, which could in turn prompt traders to adopt more hawkish Federal Reserve (Fed) bets. Higher Fed interest rate expectations are generally negative for non-yielding assets like silver, contributing to the current selling pressure [1].
Market participants are also awaiting key US economic data releases, including the Nonfarm Payrolls (NFP) for June, scheduled for Thursday. On Wednesday, attention will be focused on the US ADP Employment Change and ISM Manufacturing PMI data for June. Estimates suggest the US private sector created 113,000 new jobs, slightly lower than the 122,000 reported in May, while the ISM Manufacturing PMI is expected to remain steady at 54.0 [1].
CONCLUSION
Silver's decline below $58 reflects investor caution amid unresolved US-Iran negotiations and the prospect of higher Fed rates. Upcoming US employment and manufacturing data may further influence market sentiment and silver prices. The current geopolitical and economic uncertainty is exerting moderate downward pressure on silver.