Spot Silver rebounded after a steep loss recorded on Monday, but elevated oil prices kept inflation concerns alive and reinforced expectations of more hawkish central bank policy settings.
The uneasy ceasefire between the United States and Iran is under severe strain following a sharp flare-up of violence in the Persian Gulf on Monday.
According to a Reuters report, the US military destroyed six Iranian small boats and intercepted Iranian cruise missiles and drones, as Tehran aimed to thwart a new US naval effort to restore shipping through the Strait of Hormuz.
The UAE reported a fire at the oil port of Fujairah, which it said followed Iranian missile and drone strikes.
US President Donald Trump warned that Iran would be “blown off the face of the earth” if it targets American vessels accompanying ships through the strategic waterway, under a new initiative named “Project Freedom”.
The US Dollar extended a pullback from a 2-week low, while Brent prices held above $113 per barrel.
Elevated energy costs have added to global inflation expectations and kept central bank policy makers wary of adopting a more dovish stance. In turn, the reduced probability of near-term interest rate cuts by central banks weighed on non-interest-bearing Silver.
Traders have largely priced out Fed interest rate cuts for 2026.
Spot Silver was last up 1.26% on the day to trade at $73.65 per troy ounce.
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