Silver prices weakened to around US$85 per ounce on Tuesday (May 12), reversing course after strengthening earlier in the session. This movement occurred amid Middle East geopolitical uncertainty and prolonged disruptions in the Strait of Hormuz, which have kept oil prices high, bringing inflation risks back into the market's focus.

US President Donald Trump declared the US-Iran ceasefire to be on "massive life support" after rejecting Tehran's latest peace proposal. The statement raised concerns that the strategic shipping lane could remain effectively blocked for a longer period, strengthening the energy risk premium and maintaining market sensitivity to inflation issues.

Market participants are also awaiting the release of US consumer inflation data to determine how much the Iran conflict is starting to exert pressure on prices more broadly. This data is considered important because it will influence interest rate expectations and the direction of the dollar, two factors that often shape the price dynamics of precious metals, including silver.

The previous day, silver surged more

The previous day, silver surged more than 7% and reached its highest level in about two months, outperforming other precious metals. This performance was driven by silver's character, which not only functions as a hedging asset but also has a significant industrial use. Therefore, improving physical demand expectations contributed to the rally before the market took profits. (asd)