Silver (XAG/USD) advanced on Tuesday, trading around $70.45 and rising 0.60% on the day, as investors adjusted their positions ahead of the Federal Reserve's monetary policy decision scheduled for Wednesday [1]. The white metal's rebound was supported by ongoing weakness in the US Dollar, which has been pressured by a slowdown in US private employment growth. Specifically, US private employers added an average of 25.5K jobs per week over the four weeks ending May 30, down from 29K previously, fueling expectations of a less dynamic labor market and limiting support for the Greenback [1].
Market attention also remained focused on diplomatic developments between the United States and Iran. US President Donald Trump stated that the text of an agreement would be released in the coming days and that the Strait of Hormuz should be fully reopened by Friday. Meanwhile, Hezbollah officials indicated they had received assurances from Tehran that no final nuclear agreement would be signed without an Israeli withdrawal from Lebanon [1]. The relative improvement in the geopolitical environment has reduced some demand for safe-haven assets, though the impact on precious metals like Silver remains limited as investors await further details before making broader portfolio adjustments [1].
A decline in oil prices has also supported market sentiment, as easing energy costs could help reduce global inflationary pressures and provide central banks with greater flexibility regarding monetary policy in the coming months [1]. The weakness of the US Dollar has mechanically enhanced Silver's attractiveness for investors holding other currencies [1].
Looking ahead, traders are focused on the upcoming Federal Reserve statement and updated economic projections for clues about the future path of interest rates. Like Gold (XAU/USD), Silver generally benefits from a lower interest rate environment due to its non-yielding nature. Any indication from the Fed that it will likely not hike rates this year could continue to support Silver prices in the coming weeks [1].
CONCLUSION
Silver's recent gains are primarily driven by US Dollar weakness and anticipation of the Federal Reserve's policy decision. While easing geopolitical tensions have reduced some safe-haven demand, the market remains attentive to upcoming Fed guidance, which could further influence Silver's trajectory.