Silver Surges as Iran-US Peace Deal in Jeopardy

 

Gold and Silver Up as U.S. Awaits Iran Peace Deal Response

(Hero Bullion News) – Silver logged its best day in months as heightened uncertainty in the US-Iran conflict and rising crude oil prices injected fresh uncertainty into markets. The spot price of silver added more than $5.80 per troy ounce on Monday, cruising past $86/ozt in a bullish performance driven largely by the diminishing odds that a peace deal between the United States and Iran will come soon.

The price of gold moved little on the day, with the metal adding just over $23 per troy ounce. Monday’s price action heavily favored silver, driving the gold-silver ratio down by more than 6% to set a multi-month low. Similar to much of last week’s performance, silver continues to see heightened volatility compared to gold.

Over the weekend, U.S. President Donald Trump rejected Iran’s response to the latest American peace proposal. In a Truth Social post, the American leader derided the Iranian response as “unacceptable.”

I have just read the response from Iran’s so-called “Representatives.” I don’t like it – TOTALLY UNACCEPTABLE! Thank you for your attention to this matter.

Mr. Trump also told reporters that the proposal response was a “piece of garbage,” suggesting that the US-Iran ceasefire is “on life support” following the response from Tehran. In response, Iran’s speaker of parliament said in an X post that Iran is prepared to “teach a lesson” to the U.S. if they choose to attack.

Our armed forces are ready to respond and to teach a lesson for any aggression […] A bad strategy and bad decisions will always lead to bad results – the world already understands this.

Crude oil prices jumped over the weekend on the news. Prices for Brent Crude, the global benchmark for oil prices, rose to more than $100 per barrel on Monday due to the ongoing Iranian closure and American blockade of the Strait of Hormuz.

Wall Street eked out gains despite the uncertainty. Both the S&P 500 and Nasdaq secured new records to start the trading week, and the Dow also gained. Big tech companies continued to buoy the rest of the market, with AI-driven optimism helping to mitigate the upward risk of geopolitical instability.

Silver logged the strongest performance on the news compared to other precious metals. Platinum and palladium prices also increased on Monday, with platinum adding approximately $77.50 per troy ounce and palladium gaining just over $21/ozt.

With the ceasefire between the U.S. and Iran in peril and the American blockade of the Strait of Hormuz slated to continue, this conflict will be a core focus for safe haven asset traders throughout the week.

On Tuesday, investors will be able to review the April Consumer Price Index (CPI). This report is one of the Fed’s preferred measures of inflation and could impact how the Federal Reserve views the U.S. economic situation heading into a pivotal meeting in June.

The U.S. Senate is also expected to confirm economist Kevin Warsh as chair of the Federal Reserve this week. The current head of the FOMC, Jerome Powell, will leave office on May 15th. Warsh has been characterized as an “inflation hawk” and played a role in increasing interest rates during the 2008 financial crisis, when he served as a governor of the Federal Reserve.

Warsh has since become a vocal critic of the Federal Reserve, aligning himself with Mr. Trump’s belief that the FOMC should vote to cut interest rates. As the Federal Reserve reviews recent economic data and attempts to balance upward risks to inflation and downward risks to employment, the incoming chair could face a tricky situation, especially if Mr. Trump continues to pressure the Fed into cutting rates.

To complicate his new role even more, the FOMC is coming off of one of its most divided meetings in decades. During the FOMC’s April meeting, the committee saw four dissenting votes for the first time since 1992. Stephen Miran voted to cut interest rates, while the other three dissenters objected to the “rate cut bias language” present in the committee’s final statement.

All this to say, this month could see the revival of rate cut speculation as a major price driver for safe haven assets, including gold and silver. CME FedWatch projects a probability of only 2.3% that the FOMC will opt to cut interest rates at its June 17th meeting as of Monday. However, these numbers could fluctuate as Warsh takes over as the FOMC chair and new inflation data becomes public.

Monday was a big win for silver bulls, but the rest of this week could see more volatility in the precious metals market, depending on how things play out.