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- Silver loses ground on Monday, with XAG/USD trading around $74.60, down 0.92% on the day.
- The suspension of indirect talks between the US and Iran adds to geopolitical uncertainty in the Middle East.
- The US Dollar remains the preferred safe-haven asset, limiting the appeal of the white metal.
Silver (XAG/USD) trades lower around $74.60 per troy ounce on Monday at the time of writing, down 0.92% on the day. The white metal is facing profit-taking after trading near its recent highs, as investors continue to favor the US Dollar (USD) as the primary safe-haven asset amid persistent tensions in the Middle East.
Market sentiment remains driven by developments in relations between Washington and Tehran. While hopes for a lasting agreement had initially supported precious metals earlier in the day, several developments have reignited concerns about the outcome of negotiations. According to Iran’s Tasnim news agency, the Iranian negotiating team has suspended message exchanges with the United States (US) through mediators in response to Israeli military operations in Lebanon.
Meanwhile, Iranian Foreign Minister Seyed Abbas Araghchi warned that any violation of the ceasefire between Iran and the US would be considered a breach of the truce across all regional fronts, including Lebanon. These comments come as negotiations remain deadlocked on several key issues, including Iran’s nuclear program and the future status of the Strait of Hormuz.
Despite the heightened geopolitical tensions, flows into precious metals remain limited. Investors continue to favor the US Dollar, which benefits from strong safe-haven demand. A stronger Greenback makes Silver more expensive for holders of other currencies, weighing on international demand for the metal.
At the same time, markets continue to monitor the potential impact of Middle East developments on energy prices. A sustained rise in Oil prices could fuel global inflationary pressures and strengthen expectations for monetary tightening by the Federal Reserve (Fed), a scenario that is generally unfavorable for non-yielding assets such as Silver.
Investors now await upcoming US labor market data, including the Nonfarm Payrolls (NFP) report due on Friday, for fresh clues on the future direction of Fed policy. Interest-rate expectations remain a key driver for Silver price action in the days ahead.
