HG MARKETS: 

Silver prices surged sharply in Asian trading on Monday, with XAG/USD rising nearly 4% to around $70.80. The rally in the white metal was largely driven by a significant shift in global risk sentiment following developments in the Middle East. Investors reacted positively after the Strait of Hormuz, one of the world’s most critical energy shipping routes, was reopened. The passage handles close to 20% of global energy supplies, making its status a major factor for commodity and financial markets worldwide.

Market confidence received an additional boost after reports emerged that the United States and Iran had reached an agreement aimed at ending recent hostilities. According to reports, Iran’s Deputy Foreign Minister Kazem Gharibabadi confirmed that a deal had been reached to conclude the conflict involving the United States, Israel, and the Islamic Republic. The announcement eased concerns about potential disruptions to energy supplies and reduced fears of a broader regional conflict, encouraging investors to reassess their positions across commodity markets.

The easing of geopolitical tensions triggered a sharp decline in crude oil prices. WTI crude fell 4.8% to approximately $78.85 per barrel, marking its lowest level in more than three months. The drop reflected expectations that the reopening of the Strait of Hormuz and improving diplomatic relations would help stabilize global energy flows. Lower oil prices generally reduce concerns about supply shortages and can significantly influence inflation expectations across major economies.

In recent months, elevated oil prices fueled inflationary pressures worldwide, prompting traders to scale back expectations for interest-rate cuts from major central banks. This environment weighed on non-yielding assets such as silver, as higher interest-rate expectations tend to increase the appeal of yield-bearing investments. However, the recent decline in oil prices has helped revive optimism that inflationary pressures may ease, improving the outlook for precious metals and supporting silver’s strong upward move.

Looking ahead, investors are closely monitoring the upcoming monetary policy decision from the Federal Reserve. The US central bank is widely expected to leave interest rates unchanged within the 3.50%–3.75% range when it announces its decision on Wednesday. Market participants will focus not only on the rate decision itself but also on any guidance regarding future policy moves. Signals of a more accommodative stance could provide additional support for silver prices, while a more cautious outlook may influence the metal’s next directional move.