Silver Rally Extends on Ceasefire and Soft US Inflation

Key Moments:

Ceasefire Headlines Lift Silver Prices

Silver prices (XAG/USD) continue to climb for a second straight session, with the metal changing hands near $75.80 per troy ounce during Asian trading on Friday. The advance comes in the wake of reports that the United States and Iran have tentatively reached an understanding on extending a ceasefire for 60 days, easing market anxiety around inflation and future interest rate moves.

According to the report, the prospective agreement would permit unimpeded shipping through the strategically important Strait of Hormuz. Iran has reportedly agreed to remove all maritime mines from the passage within 30 days, a development that market participants view as potentially reducing energy-related price pressures.

Political Uncertainty Tempers Market Optimism

Despite the positive market reaction, investors remain wary. On Thursday, CNN reported that US President Donald Trump had not yet signed off on the proposed terms. Separately, the Guardian cited US Vice President JD Vance as saying Washington was “not there yet” on a definitive deal with Tehran, although he acknowledged that negotiations were close to producing an agreement.

Vance also remarked that the United States currently holds the capability to significantly degrade Iran’s nuclear program if required, underscoring the lingering geopolitical risk surrounding the talks.

Softer US Inflation Data Support Rate-Sensitive Assets

Silver received an additional boost from the latest US Personal Consumption Expenditures (PCE) report released on Thursday. The data indicated that inflation came in softer than anticipated, with headline PCE rising 0.4% month-over-month and core PCE increasing 0.2% month-over-month.

On a yearly basis, both measures remained above the Federal Reserve’s target, with headline PCE at 3.8% and core PCE at 3.3%. Nonetheless, the cooler-than-expected figures eased concerns that previous energy shocks would further deteriorate the long-term inflation outlook.

Joel Kruger, market strategist at LMAX Group, observed that the combination of softer core inflation and slowing growth points to the possibility that the Federal Reserve could dial back its aggressive “higher-for-longer” interest rate stance. Such a shift is typically viewed as constructive for risk assets and non-yielding instruments like silver.