Silver shines near $60 as falling Oil supports precious metals

• Silver rises more than 2% on Tuesday, climbing back near the $60.00 mark.
• Hopes for a US-Iran agreement to reopen the Strait of Hormuz are sending Oil prices lower.
• Falling Oil prices could ease US inflation risks and weigh on the US Dollar, supporting precious metals.

Silver (XAG/USD) trades around $59.80 at the time of writing on Tuesday, up 2.81% on the day. The white metal extends its rebound after hitting a low of $56.57 on Monday, benefiting from renewed demand for precious metals as investors monitor diplomatic developments between the United States (US) and Iran.

Market sentiment has improved modestly after US Treasury Secretary Scott Bessent said that an agreement with Iran to reopen the Strait of Hormuz could be reached as soon as Tuesday or Wednesday. He added that Energy prices are expected to "settle back down" if a deal is reached. Following his comments, West Texas Intermediate (WTI) US Oil dropped more than 3% as investors priced in a gradual normalization of global Energy supplies.

The decline in Oil prices could also have important implications for US monetary policy. A prolonged drop in Energy prices would help ease inflationary pressures, reducing the need for the Federal Reserve (Fed) to tighten its monetary policy stance. Lower interest rate expectations typically weigh on the US Dollar (USD), providing additional support for non-yielding assets such as Silver.

Markets continue to adjust their expectations for the Fed, while developments in the Middle East remain a key focus. However, conflicting statements from Washington and Tehran continue to cloud the outlook. US President Donald Trump insists that talks are taking place and has described his latest proposal as Iran's "last chance" to reach an agreement, while Iranian officials continue to deny that any negotiations with the United States are underway.

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $59.74, keeping a bullish near-term bias as it holds above the 100-period Simple Moving Average (SMA) at $58.11 and the 200-period SMA at $58.16. The former downtrend resistance line, now turned support around $58.62, reinforces the constructive structure, while the Relative Strength Index (RSI) at 74.48 signals overbought conditions that could slow the pace of further gains rather than immediately reverse the trend.

On the downside, initial support is seen at the prior breakout zone near $58.62, followed by the 200-hour SMA at $58.16 and the 100-hour SMA at $58.11, with a stronger floor near recent lows around the level of $57.00. On the topside, immediate resistance emerges at $60.09, ahead of a higher cap near $60.94, where a rejection would hint at consolidation, while a sustained break above these barriers would open the way for further upside in the short term.

(The technical analysis of this story was written with the help of an AI tool. Know more.)