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.

Oil prices advanced on Tuesday as investors weighed reports of mediation efforts aimed at securing a ceasefire between the United States and Iran against continued military exchanges and new threats by Yemen's Houthi movement to impose a maritime blockade on Saudi Arabia.

Brent crude futures rose 48 cents, or 0.5%, to $89.70 a barrel by 09:50 GMT.

US West Texas Intermediate crude for the front-month contract, which expires on Tuesday, gained 59 cents, or 0.7%, to $83.82 a barrel. The more actively traded September contract rose 50 cents, or 0.6%, to $82.98 a barrel.

"There is some optimism around de-escalation between the United States and Iran, with reports suggesting mediators have proposed a 10-day ceasefire that could put the temporary memorandum of understanding reached in June back on track," ING analysts said in a note.

However, the analysts added that the core disagreements between Washington and Tehran remain unresolved, while US President Donald Trump has warned of retaliation following the deaths of several American soldiers.

A senior Iranian official told Reuters that Tehran had received a proposal from mediators for a 10-day ceasefire in an effort to preserve the temporary agreement signed on June 17, which was intended to pave the way for a permanent deal to end the war that erupted on February 28 following US and Israeli strikes on Iran.

The diplomatic efforts came after another night of US airstrikes on Iranian cities and attacks by Iran's Revolutionary Guard against US military assets in the region. The US Central Command (CENTCOM) later announced the start of a new round of strikes on Iran.

Analysts at SEB Research said optimists could interpret the latest US strikes as a final attempt to strengthen Washington's negotiating position before reaching a settlement and reopening the Strait of Hormuz.

"But the risk remains that the current stalemate persists for longer, prolonging uncertainty over energy flows, keeping oil prices elevated, and increasing the likelihood of further attacks," they added.

In another escalation, the UK Maritime Trade Operations (UKMTO) said an oil tanker in the Strait of Hormuz was struck by an unidentified projectile on Tuesday, forcing the crew to abandon the vessel and take refuge in a lifeboat, as shipping traffic through the strait continued to decline amid ongoing US and Iranian attacks.

Meanwhile, Iran-backed Houthi forces in Yemen announced on Monday the imposition of a maritime blockade on Saudi Arabia, opening a potential new front against the United States in its conflict with Iran and increasing risks to global energy supplies and international trade.

"Houthi threats to impose a maritime blockade on Saudi Arabia are highly significant because they increase the risk of disruptions to exports from one of the world's largest oil producers," said Tim Waterer of KCM Trade.

On the supply side, a preliminary Reuters survey showed analysts expect US crude oil and gasoline inventories to have declined last week, while distillate stockpiles are forecast to increase.

The US dollar edged lower on Tuesday as investors balanced escalating tensions in the Middle East against optimism fueled by softer-than-expected US inflation data released last week.

The euro rose 0.09% against the dollar to $1.1424, while the Japanese yen slipped 0.09% to 162.63 per dollar.

The mixed moves reflected growing uncertainty across financial markets as investors struggled to assess the economic impact of rapidly evolving developments in the Middle East.

Geopolitical tensions support the dollar, diplomacy limits gains

The US military carried out a tenth consecutive night of airstrikes against Iran, reviving geopolitical concerns and prompting investors to scale back bets on a near-term end to the conflict, a backdrop that typically supports demand for safe-haven assets such as the US dollar.

At the same time, diplomatic efforts continued. A senior Iranian official told Reuters on Monday that Tehran had received, through mediators, a proposal for a 10-day ceasefire.

The lack of clarity over the direction of the conflict has left the dollar trading in a narrow range, with investors reluctant to take large positions.

Inflation and oil prices cloud the outlook

Uncertainty over inflation also kept investors cautious after softer-than-expected US inflation data last week reduced expectations for additional Federal Reserve rate hikes, limiting support for the dollar.

However, the inflation outlook remains uncertain and will depend largely on when shipping through the Strait of Hormuz returns to normal and oil markets stabilize.

According to LSEG data, traders continue to expect at least one additional Federal Reserve rate hike this year.

Brent crude futures fell 1.1% on Tuesday but remained about 21% higher since the beginning of the month.

"We think any sustained weakness in the US dollar is more likely to be a 2027 story," said Jimmy Jean, Chief Economist and Strategist at Desjardins. "We expect the dollar to remain relatively strong over the coming months until the inflation outlook becomes clearer."

The US Dollar Index, which measures the greenback against a basket of six major currencies, slipped 0.05% to 100.9 after reaching its highest level since July 15 in the previous session.

Canadian dollar steadies after new US tariffs

The Canadian dollar stabilized after falling to a one-month low following Washington's decision to impose new 50% tariffs on a broad range of Canadian products in response to what the United States described as discriminatory treatment of US automobiles, alcoholic beverages, and dairy products.

Sterling rebounds as UK enters new political chapter

The British pound rose 0.1% to $1.3441, snapping a three-session losing streak.

The move came after Andy Burnham became the UK's new prime minister, the country's seventh leader in a decade, while pledging to maintain the fiscal discipline framework established by the previous government.

Former Defence Secretary John Healey was also appointed Chancellor of the Exchequer.

Burnham has yet to provide details on how he intends to achieve his economic objectives while honoring his election pledge not to raise taxes on working people.

"The key near-term risks remain the UK's fiscal position and Burnham's commitment to the fiscal rules adopted by the previous government," said Shaun Osborne, Chief FX Strategist at Scotiabank.

Meanwhile, investors are looking ahead to the European Central Bank's policy meeting later this week. Economists surveyed by Reuters expect the ECB to leave interest rates unchanged while signaling that at least one additional rate hike remains possible before the end of the year.

Gold prices rose in European trading on Tuesday, resuming their recovery from recent lows and reaching a one-week high, supported by a weaker US dollar and a pause in the rally in global oil prices.

The gains came amid growing hopes that diplomatic efforts could ease military tensions between the United States and Iran, potentially reducing the risk of a further surge in oil prices and the resulting inflationary pressures on global central banks.

The Price

• Gold prices rose 1.9% to $4,084.23 an ounce, their highest level since July 14, after opening the session at $4,008.06. Prices touched an intraday low of $3,999.89.

• Gold settled 0.25% lower on Monday after gaining more than 1% on Friday as part of a recovery from a two-week low of $3,959.72 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 peers.

The decline came as demand for the dollar as a safe-haven asset slowed, 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

• The US military announced a new round of airstrikes against Iranian military targets, marking the tenth consecutive day of operations.

• The strikes targeted command centers, missile launch sites, drone facilities, and air defense systems as part of Washington's efforts to reduce Iran's ability to threaten shipping through the Strait of Hormuz.

• Iran said it would continue its military response, with reports indicating attacks on US military bases and facilities across the region.

• US President Donald Trump said: "Every time Iran kills an American soldier, it will pay many times over."

• 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

• Cleveland Federal Reserve President Beth Hammack joined a growing number of policymakers arguing that further interest rate increases may be necessary to curb persistent inflation.

• 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.

Gold outlook

Financial markets strategist Ilya Spivak said gold appeared to be establishing a price floor around $4,000 an ounce and would likely attempt to resume its advance from that level.

Spivak added that developments in the Middle East still appeared to be influencing gold prices, although the market's attention to the news had become increasingly brief.

SPDR Gold Trust

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased by 4.57 metric tons on Monday to 1,003.59 tons.

That marked a rebound from 999.02 tons, the fund's lowest level since September 25, 2025.