Kharg in the Spotlight, Silver Remains Slippery

Silver prices plunged more than 3% to around US$70/oz on Tuesday (April 7), their lowest level in more than a week, as the escalation in US-Iran tensions failed to trigger a safe-haven rush to the precious metal. Instead, the market viewed macroeconomic channels as more dominant: a stronger US dollar and expectations of higher interest rates exerting pressure on non-yielding assets like silver for a longer period, resulting in persistent selling pressure despite rising geopolitical risks.

Sentiment worsened after President Donald Trump issued a stern warning, demanding Iran meet US conditions by 8:00 PM ET, including the reopening of the Strait of Hormuz and a ceasefire. Meanwhile, Tehran reported attacks on Kharg Island—a key oil export hub—and the Yahya Abad rail bridge, while warning of potential retaliatory strikes “outside the region” if the US oversteps its bounds. These headlines heightened uncertainty but failed to shift the market's focus, which is focused on the impact of energy inflation and central bank responses.

Trendwise, silver remains around 25% below pre-war levels, pressured by a strengthening dollar and fading hopes for a Fed rate cut. With market participants tending to hold off on easing scenarios, silver's appeal as a hedge has diminished—making prices more vulnerable to the combination of high real yields, energy volatility, and cross-asset liquidation amid the crisis.

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