With uncertain prospects for peace between the US and Iran, silver is being sold off – what is the market pricing in?
2026-07-01 13:35:32
On Wednesday (July 1) during the Asian session, silver prices continued their overnight weakness, falling back to around $57.50 per ounce, with an intraday drop of more than 1%.
Despite silver's dual attributes as both an industrial metal and a safe-haven asset, in the current environment, the market is increasingly cautious about the sustainability of the prospects for peace between the US and Iran, and the inflow of safe-haven funds has failed to provide sufficient support for silver prices.
Previously, the US and Iran reached a preliminary memorandum of understanding in Oman, which briefly pushed down the geopolitical risk premium, and silver prices continued to pull back from their highs above $62 in mid-June.
However, as negotiations entered a substantive phase, disagreements began to surface, and the decline in silver prices gradually deepened in the process.
On Tuesday, U.S. negotiators arrived in Doha to discuss Iran's demands for passage fees near the Strait of Hormuz. The Strait of Hormuz carries approximately 20% of the world's energy supply, its strategic importance is self-evident. However, the U.S. negotiating team made it clear that they are only willing to talk with mediators and will not meet directly with Iranian representatives.
This stance is significantly different from Iran's expectations. Tehran has previously stated its intention to begin collecting passage fees in the Strait of Hormuz after the 60-day negotiation window expires, viewing this mechanism as a confirmation of its substantial control. The US refusal to engage in direct dialogue has fueled market concerns about whether global vessels can continue to use the waterway without paying any fees.
For silver, the impact of this stalemate is multifaceted. On the one hand, the uncertainty surrounding the Middle East situation should theoretically support safe-haven assets; on the other hand, continued tensions could push up oil prices again, thereby reinforcing market expectations that the Federal Reserve will maintain high interest rates—which puts downward pressure on non-interest-bearing assets such as silver.
If the deadlock in US-Iran negotiations leads to a renewed rise in oil prices, inflation expectations will subsequently increase. This will force the market to reassess the Federal Reserve's monetary policy path—the probability of a rate hike in the remaining policy meetings this year may further increase.
As a non-interest-bearing asset, silver is highly sensitive to changes in real interest rates. When the market prices up the probability of a Federal Reserve rate hike, the opportunity cost of holding silver increases, and funds tend to flow from precious metals to yield-generating assets. The recent strengthening of the US dollar index also reflects this logic to some extent.
On Wednesday, during the North American trading session, the market will see two sets of key data releases:
The US June ADP employment change report projects 113,000 new jobs in the private sector, slightly lower than May's 122,000. If the data falls short of expectations, it could trigger market concerns about a loosening of the job market, thus weakening the dollar and supporting silver prices; conversely, if the data exceeds expectations, it could reinforce expectations of a Fed tightening, further pressuring silver prices.
US June ISM Manufacturing PMI: The market expects the index to remain unchanged at 54.0. A reading higher than expected indicates robust expansion in US manufacturing, potentially reinforcing the "soft landing" narrative and reducing safe-haven demand; a reading lower than expected could reignite market concerns about an economic slowdown, providing safe-haven support for silver.
In addition, the market is also preparing for the US June non-farm payrolls report to be released on Thursday. This data will provide a more comprehensive picture of the labor market and is an important basis for judging the Fed's next policy path.
In the short term, the price trend of silver will depend on the convergence of the following three variables:
First, the progress and stalemate in US-Iran negotiations. If the two sides continue to fail to reach a consensus on the toll issue, geopolitical uncertainty will remain high, but the risk of a renewed rise in oil prices will also simultaneously suppress the real interest rate logic of silver.
Second, the performance of US economic data. The ADP and ISM manufacturing PMIs will provide the market with early signals on June employment and manufacturing activity, directly influencing market pricing of the Fed's interest rate hike path.
Third, the direction of the US dollar index. Silver and the US dollar are usually negatively correlated. If the US dollar strengthens further driven by safe-haven demand, silver prices will face additional downward pressure.
According to the daily chart, spot silver entered a medium-to-long-term downtrend after reaching a historical high of 121.49, and the current downtrend is clear. The price has broken below the MA20, MA50, MA100, and MA200 moving averages, with all moving averages simultaneously exerting downward pressure. The MA20 (64.352) and MA50 (71.805) form a strong resistance zone, and the long-term moving average MA200 (69.587) has also turned downward, resulting in an overall bearish alignment of moving averages.
In terms of indicators, the MACD continues to run below the zero axis, the DIFF (-4.222) is below the DEA (-3.701), the green bars continue, and the bearish momentum has not yet dissipated; the RSI value is 30.48, close to the 30 oversold threshold, indicating a short-term technical rebound and correction demand, but no bottom reversal signal has yet appeared.
(Spot silver daily chart, source: EasyForex)
At 13:35 Beijing time on July 1, spot silver was trading at $57.55 per ounce.
Despite silver's dual attributes as both an industrial metal and a safe-haven asset, in the current environment, the market is increasingly cautious about the sustainability of the prospects for peace between the US and Iran, and the inflow of safe-haven funds has failed to provide sufficient support for silver prices.
Previously, the US and Iran reached a preliminary memorandum of understanding in Oman, which briefly pushed down the geopolitical risk premium, and silver prices continued to pull back from their highs above $62 in mid-June.
However, as negotiations entered a substantive phase, disagreements began to surface, and the decline in silver prices gradually deepened in the process.
US-Iran Negotiation Stalemate: Undercurrents Beneath the Surface of Peace
On Tuesday, U.S. negotiators arrived in Doha to discuss Iran's demands for passage fees near the Strait of Hormuz. The Strait of Hormuz carries approximately 20% of the world's energy supply, its strategic importance is self-evident. However, the U.S. negotiating team made it clear that they are only willing to talk with mediators and will not meet directly with Iranian representatives.
This stance is significantly different from Iran's expectations. Tehran has previously stated its intention to begin collecting passage fees in the Strait of Hormuz after the 60-day negotiation window expires, viewing this mechanism as a confirmation of its substantial control. The US refusal to engage in direct dialogue has fueled market concerns about whether global vessels can continue to use the waterway without paying any fees.
For silver, the impact of this stalemate is multifaceted. On the one hand, the uncertainty surrounding the Middle East situation should theoretically support safe-haven assets; on the other hand, continued tensions could push up oil prices again, thereby reinforcing market expectations that the Federal Reserve will maintain high interest rates—which puts downward pressure on non-interest-bearing assets such as silver.
Federal Reserve forecasts: Interest rate outlook weighs on silver prices
If the deadlock in US-Iran negotiations leads to a renewed rise in oil prices, inflation expectations will subsequently increase. This will force the market to reassess the Federal Reserve's monetary policy path—the probability of a rate hike in the remaining policy meetings this year may further increase.
As a non-interest-bearing asset, silver is highly sensitive to changes in real interest rates. When the market prices up the probability of a Federal Reserve rate hike, the opportunity cost of holding silver increases, and funds tend to flow from precious metals to yield-generating assets. The recent strengthening of the US dollar index also reflects this logic to some extent.
Key Data Preview: ADP and ISM Manufacturing PMI to Provide Short-Term Guidance
On Wednesday, during the North American trading session, the market will see two sets of key data releases:
The US June ADP employment change report projects 113,000 new jobs in the private sector, slightly lower than May's 122,000. If the data falls short of expectations, it could trigger market concerns about a loosening of the job market, thus weakening the dollar and supporting silver prices; conversely, if the data exceeds expectations, it could reinforce expectations of a Fed tightening, further pressuring silver prices.
US June ISM Manufacturing PMI: The market expects the index to remain unchanged at 54.0. A reading higher than expected indicates robust expansion in US manufacturing, potentially reinforcing the "soft landing" narrative and reducing safe-haven demand; a reading lower than expected could reignite market concerns about an economic slowdown, providing safe-haven support for silver.
In addition, the market is also preparing for the US June non-farm payrolls report to be released on Thursday. This data will provide a more comprehensive picture of the labor market and is an important basis for judging the Fed's next policy path.
Market Outlook
In the short term, the price trend of silver will depend on the convergence of the following three variables:
First, the progress and stalemate in US-Iran negotiations. If the two sides continue to fail to reach a consensus on the toll issue, geopolitical uncertainty will remain high, but the risk of a renewed rise in oil prices will also simultaneously suppress the real interest rate logic of silver.
Second, the performance of US economic data. The ADP and ISM manufacturing PMIs will provide the market with early signals on June employment and manufacturing activity, directly influencing market pricing of the Fed's interest rate hike path.
Third, the direction of the US dollar index. Silver and the US dollar are usually negatively correlated. If the US dollar strengthens further driven by safe-haven demand, silver prices will face additional downward pressure.
Technical Analysis
According to the daily chart, spot silver entered a medium-to-long-term downtrend after reaching a historical high of 121.49, and the current downtrend is clear. The price has broken below the MA20, MA50, MA100, and MA200 moving averages, with all moving averages simultaneously exerting downward pressure. The MA20 (64.352) and MA50 (71.805) form a strong resistance zone, and the long-term moving average MA200 (69.587) has also turned downward, resulting in an overall bearish alignment of moving averages.
In terms of indicators, the MACD continues to run below the zero axis, the DIFF (-4.222) is below the DEA (-3.701), the green bars continue, and the bearish momentum has not yet dissipated; the RSI value is 30.48, close to the 30 oversold threshold, indicating a short-term technical rebound and correction demand, but no bottom reversal signal has yet appeared.
(Spot silver daily chart, source: EasyForex)
At 13:35 Beijing time on July 1, spot silver was trading at $57.55 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
