Silver Slides as Trump’s Iran Warning Shakes Markets

Silver prices came under heavy pressure on Thursday, dropping over 5% after Donald Trump hinted at a tougher military stance on Iran. In early European trade, spot silver fell to $71.26 per ounce and continued to fall to $70.60 as the market responded to geopolitical risk.

This decline came after Trump’s televised remarks, where he cautioned that the United States could strike Iran “extremely hard” in the next two to three weeks, if necessary. However, the statement instead reduced hopes of de-escalation and triggered a flight from risk assets into the safety of the U.S. dollar.

Other precious metals also depreciated. Gold fell 2.8% to $4,622.59 an ounce, while platinum and palladium lost. The dollar strength and rising oil prices, which both led to concerns about persistent inflation and lower chances of rate cuts in the near future, caused the broad-based sell-off. Silver is a non-yielding asset, and hence, is sensitive (inverse) to a rise in interest rate expectations.

Sentiment worsened after Trump’s speech that did not offer any clear exit strategy but rather focused on continued military pressure. Sentiment worsened as Trump’s speech offered no clear exit strategy but, rather, focused on the continuation of military pressure.

At the same time, oil prices surged on fears of supply disruptions in the Middle East, fueling inflation worries. The stronger dollar also put pressure on metals making them less appealing to the global investors. Equity markets fell while U.S. Treasury bonds soared on a defensive sentiment among investors.

Adding to the uncertainty, Iran stated that recent strikes had not significantly damaged its military infrastructure, including missile systems, drones, and air defenses, signifying a continuation of the conflict despite U.S. proclamations of progress.

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