On Tuesday (July 28) during Asian trading hours, spot silver fluctuated and fell, once dropping nearly 3% to a new low of $56.68 per ounce since July 22, and is currently trading around $57.20 per ounce. The prospect of a ceasefire between the US and Iran pushed oil prices lower, easing market concerns about inflation and further interest rate hikes, which theoretically provided support for silver. However, Trump's warning that airstrikes would resume if negotiations broke down indicates that geopolitical risks have not completely dissipated. Meanwhile, the market is focused on this week's FOMC decision—widely expected to remain on hold, but a minority still pricing in a July rate hike, and this uncertainty limits silver's upside potential.

The prospect of a ceasefire is weighing on oil prices, but the risk premium has not fully subsided.

The US-Iran diplomatic process remains a key variable in the short-term pricing of silver. Trump stated that the US and Iran are engaged in "good dialogue" to resolve the Middle East conflict, but warned of resuming military strikes if negotiations break down. This statement comes against the backdrop of Washington suspending its 13-night airstrikes over the weekend, with no attacks reported for three consecutive days, and Tehran simultaneously halting retaliatory strikes against US military bases in neighboring countries. However, the Iranian Foreign Ministry countered that it has not engaged in direct negotiations with the US, but is only maintaining dialogue with Oman regarding the future of the Strait of Hormuz. This difference in US and Iranian positions means that the progress of diplomacy remains highly uncertain, and the geopolitical risk premium has not completely subsided. For silver, this news has a dual impact: the decline in oil prices alleviates inflation concerns (theoretically negative for silver's safe-haven demand, but positive for its industrial attributes), but the persistence of geopolitical risks provides a safe-haven support level for silver. The current price performance around $57 reflects the delicate balance between these two forces.

The consensus is to hold rates steady, but the probability of a September rate hike remains high.

Market focus is shifting to this week's FOMC decision. The market widely expects the Fed to keep interest rates unchanged, but inflationary pressures remain, and a few traders are still betting on an immediate rate hike in July. The broader market consensus is that any potential rate hike is more likely to be postponed until September. The CME FedWatch tool shows that the market is pricing in a 38% probability of a 25 basis point rate hike in July and a high 81% probability of a rate hike in September. This "fuzzy near-term, clear far-term" pricing structure means that if the Fed releases hawkish signals in its statement (such as hinting at a September rate hike), silver may come under downward pressure; if the statement is dovish, silver may get a breather. For silver, the impact of the FOMC decision is transmitted through two channels: the dollar channel (hawkish → stronger dollar → suppressing silver) and the interest rate channel (hawkish → rising real interest rates → suppressing non-interest-bearing assets). The current market's full pricing of a September rate hike means that silver's upside potential is structurally limited in the medium term.

Market Focuses on FOMC Decision

Silver prices will be highly dependent on three key variables in the near term. If US-Iran diplomatic negotiations ultimately break down, geopolitical risks will escalate sharply, significantly increasing safe-haven demand and supporting silver as a traditional safe-haven asset, potentially leading to further upward movement. Simultaneously, if the Federal Reserve's FOMC decision is more hawkish than expected, the strengthened dollar interest rate advantage will suppress the overall performance of precious metals, and silver may continue to face downward pressure. However, if international oil prices continue to decline, it will effectively alleviate global inflation concerns, reduce market expectations for further tightening by the Fed, thereby weakening the dollar's safe-haven attributes and attractiveness, indirectly providing room for a silver rebound. In summary, silver remains in an environment of geopolitical risk aversion and policy tightening in the short term, with the aforementioned three factors intertwined. Investors need to closely monitor the progress of US-Iran negotiations, FOMC rhetoric, and oil price fluctuations, and flexibly respond to potential breakouts.

Spot silver awaits directional catalyst.

Spot silver retreated slightly to around $57 amid a ceasefire between the US and Iran and a decline in oil prices. Progress in geopolitical negotiations eased short-term inflation concerns, but the difference in stances between the US and Iran suggests that geopolitical risks have not completely dissipated, providing a bottom support for silver. The market remains cautious ahead of the FOMC decision, and the Fed's policy signals will be a key variable in breaking the current consolidation pattern. In the short term, silver is likely to consolidate within its current range. If the Fed is more hawkish than expected or the US-Iran negotiations break down, silver will continue to be under pressure; if the Fed is dovish and oil prices continue to fall, silver may rebound to above $59.00. For traders, Wednesday's FOMC decision and marginal changes in the geopolitical situation will jointly determine the short-term direction of silver—until then, range-bound trading will remain the main theme. (Spot silver daily chart, source: EasyTrade) At 14:08 Beijing time on July 28, spot silver was trading at $57.18 per ounce.