Silver jumps more than 5% on hopes of easing Iran conflict

Silver prices surged more than 5% in European trading on Tuesday, extending gains for a third consecutive session and climbing to their highest level in a week as the metal continued to recover from recent lows.

The rally was supported by a weaker US dollar and a pause in the advance of global oil prices, while improving market sentiment was driven by hopes that diplomatic efforts could ease military tensions between the United States and Iran, reducing the risk of higher oil prices and the inflationary pressures they could place on major central banks.

The Price

• Silver prices jumped 5.1% to $59.25 an ounce, their highest level in a week, after opening at $56.41. The metal touched an intraday low of $56.11.

• Silver gained 0.9% on Monday, marking its second consecutive daily advance as it continued to recover from an eight-month low of $54.77 an ounce.

US dollar

The US Dollar Index fell 0.15% on Tuesday, heading for its first decline in four sessions and reflecting broad weakness in the US currency against a basket of major and minor peers.

The decline came as demand for the dollar as a safe-haven asset eased, supported by improving investor sentiment and stronger risk appetite amid growing expectations that diplomatic efforts could contain the military escalation between the United States and Iran.

Oil prices

Global oil prices fell more than 0.5% on Tuesday, retreating from six-week highs amid profit-taking and growing hopes that diplomatic efforts could ease tensions around the Strait of Hormuz and ensure the continued flow of oil shipments through the vital waterway.

Iran conflict update

• International mediators submitted a formal proposal to Tehran calling for a 10-day ceasefire in an effort to revive the previously agreed temporary accord and reduce military tensions.

• Iran's Foreign Ministry confirmed that indirect contacts and exchanges of messages and proposals with Washington through mediators remain ongoing despite the continued airstrikes.

US interest rates

• According to CME Group's FedWatch Tool, markets are pricing in an 84% probability that the Federal Reserve will leave interest rates unchanged at its July meeting and a 16% chance of a 25-basis-point increase.

• For the December meeting, markets are pricing in an 18% probability that rates will remain unchanged and an 82% chance of a 25-basis-point increase.

• Investors are closely monitoring upcoming US economic data to further refine expectations for the Federal Reserve's policy path.