Silver prices are crashing despite rising geopolitical uncertainties. Silver in the international market trades around $ 80, down almost 10% on Tuesday. The Indian markets are closed today, and MCX will publish spot rates on Wednesday. The silver and gold prices in India are expected to open lower on Wednesday.
Oil prices on Tuesday have jumped nearly 9%, with Brent trading around $85. Gold is also under pressure as prices fell below $5,111 per ounce on Tuesday, down by 4%, pressured by a stronger US dollar and rising Treasury yields. Silver has extended prior-session losses as a firmer dollar and higher Treasury yields offset demand for traditional safe-haven assets.
In light of the recent strength of the US dollar index, the demand for silver and gold appears to be declining. US dollar index, which measures the currency’s strength against a basket of six other currencies, is up by 1.4% in the last 5 days. After falling to as low as 96, the index is inches away from crossing the 100 mark, last seen in May 2025.
The US dollar is gaining strength as investors flock to the reserve currency due to rising energy prices linked to the Middle East conflict. Increased fuel costs heightened inflation worries, resulting in higher bond yields as markets reevaluated the Federal Reserve’s policy outlook.
When the dollar index strengthens, historical data indicate that gold prices fall, and conversely, when the dollar weakens, gold prices rise. This is because investors typically prefer dollar-denominated assets over non-yielding assets like gold when the dollar starts showing strength.
Beyond the dollar, gold prices are also supported by aggressive rate cuts from the US Federal Reserve, while a prolonged higher rate scenario exerts pressure on gold prices. Expectations for the next Fed rate cut have shifted to September from July, with two 25 basis point reductions still expected in 2026.
Meanwhile, US military strikes on Iran are anticipated to increase, focusing on missile production facilities, drones, and naval assets. An Iranian official cautioned that vessels in the Strait of Hormuz may be targeted, as tanker traffic is currently disrupted by elevated security risks.