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- Silver price falls over 2.5% as traders lock in profits.
- The safe-haven metal may rebound amid persistent US–Iran geopolitical tensions.
- Fed Governor Miran said the Fed must stay politically independent, though complete independence is impossible.
Silver price (XAG/USD) depreciates after two days of gains, trading around $81.70 per troy ounce during the European hours on Tuesday. Silver prices dropped more than 2.5% as traders probably booked profits, while volatility in the precious metals market remained elevated after a historic selloff in recent weeks.
The safe-haven metal could regain strength amid persistent geopolitical tensions between the United States (US) and Iran. Uncertainty continues as Iran insists on maintaining uranium enrichment, a key sticking point for Washington. On Monday, the US warned American-flagged vessels to avoid Iranian waters in the Strait of Hormuz, even as both sides indicated that talks would continue following what were described as constructive discussions in Oman last Friday.
US Treasury Secretary Scott Bessent blamed the sharp swings in metals prices on Chinese trading activity, characterizing the recent rally as a speculative blowoff. Commenting on Federal Reserve policy, Bessent said he expects the central bank to proceed cautiously with any balance-sheet reduction.
Meanwhile, Federal Reserve (Fed) Board Governor Stephan Miran said on Monday the Fed should remain fully independent of political influence, before tempering his remarks by noting that complete, 100% independence is “impossible.”
Markets currently expect the Fed to leave interest rates unchanged in March, with rate cuts priced in for June and possibly September. It is worth noting that changes in interest rates directly impact non-interest-bearing assets such as Silver.
Traders are now awaiting the US Retail Sales data later in the North American session. Attention will then turn to the delayed January employment report and upcoming CPI figures later this week, which are expected to influence expectations around economic cooling and the timing of potential Federal Reserve easing.
