Silver Price Forecast: XAG/USD rises to near $85.00 as Middle East war intensifies

• Silver rebounds more than 3% after tumbling over 12% in the prior two sessions.

• The precious Silver attracts safe-haven demand as geopolitical conflict in the Middle East escalates.

• President Trump warned escalation could bring equally hardline Iranian leadership, highlighting uncertainty over the conflict’s outcome.

Silver price (XAG/USD) recovers over 3% during the Asian hours on Wednesday, hovering around $85.20 per troy ounce after plunging more than 12% over the previous two sessions. The precious metal draws safe-haven demand as geopolitical conflict in the Middle East intensifies.

According to CNN, US Secretary of State Marco Rubio confirmed that all personnel were safe after a drone struck the grounds of the US consulate in Dubai. The US had earlier shut its embassies in Saudi Arabia, Kuwait, and Lebanon, urging Americans to leave certain countries in the region. Meanwhile, Israeli forces launched a new ground operation in southern Lebanon targeting Hezbollah, alongside increased airstrikes.

Israel reportedly hit a building where Iranian clerics were meeting to choose a new Supreme Leader. US President Donald Trump warned that the escalation could pave the way for an equally hardline leadership in Iran, underscoring uncertainty surrounding the conflict’s outcome.

The BBC reported that Trump said the US Navy would provide insurance support to commercial vessels in the Gulf after Iran effectively disrupted traffic through the Strait of Hormuz. He added that US forces would escort ships if necessary, following reports that Iranian forces had fired on several vessels.

However, gains in dollar-denominated Silver may be capped as the US Dollar (USD) strengthens on concerns that higher energy prices could fuel inflation, leading investors to reassess the policy outlook of the Federal Reserve (Fed). Markets expect the Fed to keep interest rates unchanged until summer.