Silver (XAG/USD) surged over 3% to near $58.20 during the early European trading session on Tuesday, driven by a pause in the recent oil price rally and renewed hopes for diplomatic engagement between the United States and Iran following recent military aggression in the region [1]. At the same time, WTI Oil prices traded 0.45% lower at approximately $81.90, after correcting from a fresh monthly high of $84.42 posted on Monday [1]. The recent Middle East conflict had previously pushed oil prices higher, disrupting energy supplies and de-anchoring global inflation expectations, which in turn intensified fears of interest rate hikes by central banks—a scenario that had weighed negatively on non-yielding assets like silver [1].
Fresh optimism for de-escalation in the US-Iran conflict emerged after a spokesperson from Tehran confirmed receiving a proposal for a 10-day cessation of strikes from mediators, aimed at reviving the interim deal between the two nations. This development boosted investor confidence that negotiations remain possible [1].
On the monetary policy front, the Federal Reserve is widely anticipated to keep interest rates unchanged at its policy meeting next week, according to the CME FedWatch tool [1].
From a technical perspective, XAG/USD is trading higher at around $58.12 but maintains a bearish near-term bias, as it remains below the 20-period exponential moving average (EMA) at $59.65. The Relative Strength Index (14) has recovered from oversold readings to 41.94, indicating only moderate, corrective upside pressure rather than a sustained bullish move. Key resistance is at the 20-day EMA ($59.65), while support is seen at the July 17 low of $54.77 [1].
CONCLUSION
Silver prices have rebounded sharply amid a pause in oil's rally and renewed hopes for US-Iran diplomatic progress, but technical indicators suggest the upside may be limited unless key resistance levels are breached. The market is also awaiting the upcoming Federal Reserve policy decision, which is expected to keep rates unchanged.