Silver has endured a turbulent stretch, lurching from a sharp selloff triggered by the collapse of the US–Iran provisional peace agreement to a rapid recovery fueled by fresh Middle Eastern hostilities and a weakening dollar. The white metal, which briefly touched a weekly low of $55.75, has clawed back to trade near $59 per ounce, with institutional investors positioning for a longer-term rebound even as short-term headwinds persist.
The catalyst for the initial leg lower came on Wednesday when President Donald Trump declared the tentative peace deal with Iran dead. Crude oil prices surged more than 5% on the news, stoking inflation fears and reinforcing expectations that the Federal Reserve will keep interest rates elevated. Markets now assign a 66% probability to a US rate hike in September, a scenario that typically pressures zero-yielding assets like silver. Against that backdrop, the metal slumped to $58.38 before extending its decline.
Yet even as prices faltered, a contrarian trend emerged in the ETF arena. The iShares Silver Trust recorded net inflows of over $14 million last week, with holdings expanding by roughly four tonnes. The buying is in stark contrast to gold, where the world’s largest gold ETF, SPDR Gold Shares, shed nearly $1 billion over the same period. Year-to-date, silver ETFs have suffered net outflows of around $3.6 billion, representing a 9% contraction in total holdings, suggesting that the recent inflows represent selective accumulation rather than a broad reversal.
The geopolitical landscape shifted again on Thursday, sending silver sharply higher. American strikes against Iran prompted retaliatory rocket attacks on Kuwait and Bahrain, driving investors into safe havens. The rebound accelerated as the US dollar softened, making dollar-denominated silver more attractive to overseas buyers. The metal surged as much as 3.5% in a single session, bringing the psychologically important $60 level back into sight. President Trump later calmed markets by stating that Iran was seeking a deal, but the damage to sentiment had already been done.
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The gold-to-silver ratio, a key barometer for relative value, stood at 69.44 – meaning an ounce of gold buys nearly 69.5 ounces of silver. The ratio has edged lower from recent highs, signaling that silver is starting to outperform its yellow counterpart.
Technically, silver has bounced hard from its June low near $54, but analysts remain cautious. Many chart watchers describe the current pattern as a bear flag, warning that a sharp rally could be a prelude to further downside. Nevertheless, a sustained break above nearby resistance would open the door to a move toward $73 in the medium term, according to some technical strategists.
Major banks are looking well beyond the current noise. J.P. Morgan forecasts an average silver price of $81 per ounce for the current year – roughly double the average of 2024. Longer-term, a handful of analysts see the metal reaching $100 by 2030, underpinned by industrial demand and structural supply deficits.
For now, the trajectory hinges on the Federal Reserve. The release of the Fed minutes on Wednesday will be scrutinized for any shift in the rate outlook. Should policymakers signal that cuts are on the horizon, the current rally would gain significant momentum. If, however, the hawkish tone persists, silver’s recovery may prove short-lived. The competing forces of geopolitical risk, dollar direction, and monetary policy are keeping the white metal firmly in the spotlight.
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