By: Economy Middle east

Silver prices regained momentum on Tuesday as investor sentiment recovered on hopes of de-escalation in the Middle East following U.S. President Donald Trump’s decision to halt potential strikes on Iran’s energy facilities for five days.

As of 7:10 GMT, spot silver was trading 0.91 percent higher at $69.73 after falling over 15 percent last week.

The rally comes as gold prices rose to $4,414.73 an ounce, while global stocks edged higher.

Fed rate cut expectations weigh on non-yielding assets

“Silver has come under even heavier pressure, reflecting its higher beta and greater cyclical sensitivity. The sell-off accelerated following the break below $80, which, from a technical perspective, opened the way toward $40. Since then, the unwind of previously popular trades has added further downside momentum,” said Ole Hansen, Head of Commodity Strategy, Saxo Bank.

The recent steep pullback in silver prices was mainly fueled by higher oil prices and growing inflation worries, which have strengthened expectations that monetary policy will stay tighter for longer. Major central banks, including the Federal Reserve, the ECB, the Bank of England and the Bank of Japan, have all kept a cautious tone, indicating that interest rates may remain elevated for an extended period.

Markets have now delayed expectations for Fed rate cuts until 2027, while also factoring in additional rate increases in Europe, which has weighed on the attractiveness of non-yielding assets such as silver and gold.

On the economic front, stronger-than-expected U.S. labor data, with jobless claims dropping to 205,000, has added to the hawkish outlook.

“The magnitude of the correction is notable. Month-to-date, gold is down 19.4 percent and silver 30.9 percent, while year-to-date losses stand at 1.8 percent and 8.1 percent, respectively. However, on a one-year basis, gold remains up 38.3 percent and silver 90.0 percent, underscoring how strong the preceding rally had been and why the current liquidation phase is proving so intense,” added Hansen.

Silver to remain more sensitive to growth concerns

Earlier in the year, J.P. Morgan Global Research expected silver prices to average $81 in 2026. This follows an eventful 2025 during which silver underwent a nearly 130 percent increase in value, starting the year at $29 and rising to over $70 by year-end.

“Once the dust settles and the current wave of forced selling runs its course, the outlook for gold in particular may improve again quite sharply. Fiscal debt concerns continue to build, while the risk of stagflation is rising as higher energy costs threaten growth, keeping inflation elevated,” Hansen added.

He noted that in such an environment, policymakers face limited flexibility, which may ultimately renew demand for gold as a hedge against macro instability and currency debasement.

He added that silver prices may also rebound, but are likely to remain more sensitive to growth concerns in the near term.