Silver Sheds 5.7% as Trump's Iran Rebuff Reignites Inflation Jitters

COMEX silver settled at USD 61.03/oz, down 5.7%, as Trump's rejection of an Iranian proposal revived Middle East risk and Fed rate-hike bets.

A single geopolitical decision was enough to undo days of cautious optimism in the silver market. President Trump's rejection of an Iranian proposal sent fresh ripples through commodity trading desks, reviving fears of climbing crude prices and, with them, the inflation and interest-rate anxieties that had only recently begun to fade.

The metal bore the brunt of that shift. On Monday, COMEX front-month silver settled at USD 61.03 per troy ounce, a daily loss of 5.7%. The mood had been markedly different just a week earlier, when softening oil prices briefly soothed price-growth concerns while investors tracked diplomatic overtures around the Iran conflict on the sidelines of the UN sessions. Monday's political setback wiped out that recovery narrative and pulled market attention squarely back to Middle East risk.

Rate Bets and a Stronger Greenback Do the Heavy Lifting

Silver's slide lands in a stretch of pronounced rate nervousness. According to media reports, the market-implied probability of a Federal Reserve rate hike in October had already climbed to roughly 70% by mid-last week, up from 55% the day before. Hawkish commentary from within the central bank, combined with stronger-than-expected US private-sector data, fueled that repricing.

Rising Treasury yields and a firmer dollar had already pushed silver lower at the end of the prior trading week. Higher rates and bond returns raise the opportunity cost of holding non-yielding metals, while a stronger greenback makes the commodity more expensive for buyers outside the US currency zone. Those macro forces have kept the metal on the back foot ever since.

The selling pressure extended into Tuesday. Silver briefly touched its lowest level since early August before a modest technical countermove took hold during the session. Media reports attributed the temporary stabilization to oversold technical indicators, though recovery attempts quickly ran into renewed selling.

Physical Tightness Meets a Chart Wall at $70

The ferocity of the sell-off sits awkwardly against the physical picture. Supply remains structurally strained, per media reports: cumulative market deficits and resilient demand are colliding with production that responds only sluggishly, since silver is largely extracted as a byproduct of mining other metals. Over the near term, though, that support is dissipating at chart resistance.

As Handelsblatt reported, silver had recovered from a July low but has repeatedly failed at the USD 70-per-ounce threshold. The metal remains well below its January record high of nearly USD 122 per ounce, and is down 14% year-to-date.

Longer-horizon observers see reasons beyond traditional demand. At an industry event on Monday, representatives of miner First Majestic Silver pointed to artificial-intelligence data centers, solar panels and solid-state batteries as potential sources of additional consumption. Brokerage CLSA, in a September 17 assessment, likewise described the market as tight, projecting a physical deficit of 46.3 million ounces for full-year 2026 following a 40.3-million-ounce shortfall in 2025. CLSA also estimated that roughly 762.1 million ounces have been drawn from above-ground inventories since 2021.

Washington Data Holds the Next Cue

Direction in the coming days will hinge largely on fresh economic releases out of Washington. Investors are watching the upcoming US PCE price index and the September labor market report, both regarded as key gauges for the Fed's future rate path. Should the figures reinforce the case for tightening, the metal faces further headwinds. Weaker readings, by contrast, would open the door to a technical rebound.

For now, silver remains firmly in the grip of the broader rate and currency story.