Silver Price Sags Amid Strengthening Dollar, Weighing on Hopes for Rate Cut Amid US-Iran Tensions

Silver Prices Slide Amid Global Uncertainty

Silver prices on the Multi Commodity Exchange (MCX) remained muted but in the red on Tuesday, April 7, tracking broader caution in the precious metals market. Investors are on edge ahead of a deadline set by U.S. President Donald Trump on reopening the Strait of Hormuz, a major geopolitical flashpoint in the Iran war. The firm dollar also contributed to the weakness, causing the white metal to fall as much as 0.67% to ₹2,31,800 per kg. Meanwhile, MCX gold price was flat at ₹1,49,625 per 10 grams.

In international markets, Spot silver fell 0.9% to $72.11 per ounce by 0100 GMT, reflecting a mild pullback in precious metals amid heightened uncertainty. Spot gold was steady at $4,646.69 per ounce, while U.S. gold futures for June delivery slipped 0.2% to $4,674.40.

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The dollar index, which measures the U.S. currency against six other units, was at 100.06, near its recent highs. The dollar has been the haven of choice among investors during the tumult. Rising uncertainty over the Iran-U.S.-Israel conflict and the threat of shipping disruption through the Strait of Hormuz kept investors on edge today.

Iran said on Monday it wanted a lasting end to the war while resisting pressure to reopen the route, even as U.S. President Donald Trump warned the country could be "taken out" if no deal is reached by Tuesday night. For silver, such geopolitical stress can offer support through its safe-haven appeal, but it can also spark broader market risk aversion, leading investors to book profits and reduce exposure across commodities.

The U.N. Security Council's expected vote on a resolution aimed at protecting commercial shipping in the Strait of Hormuz also remained in focus. Although the proposal was reportedly watered down after China opposed authorizing the use of force. Any escalation in the region could further tighten energy supplies and intensify volatility across global markets.

That impact was already visible in the oil market, with crude prices extending gains and staying above $110 a barrel, leading to inflation worries. If inflation remains elevated, central banks — especially the U.S. Federal Reserve — may be forced to keep interest rates higher for longer, which is generally negative for non-yielding assets such as silver and gold.

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For the current year, markets are widely pricing in no chance of a Federal Reserve rate cut, according to CME's FedWatch tool. Investors are now awaiting the minutes of the Fed's March policy meeting on Wednesday, along with a series of key U.S. inflation indicators that could shape the near-term direction for silver.

The Personal Consumption Expenditures (PCE) data due on Thursday and the Consumer Price Index (CPI) reading on Friday are likely to be closely watched, as hotter-than-expected inflation could reinforce the view that U.S. rates will stay elevated for longer.

According to Renisha Chainani, Head – Research at Augmont, key triggers for bullion prices this week would include the US-Iran deadline, US GDP data, and the minutes of the Federal Open Market Committee (FOMC) meeting. She expects gold to trade in the range of $4,580 (around ₹144,000) to $4,800 (around ₹154,000) this week, while silver is likely to move between $67 (around ₹215,000) and $77 (around ₹242,000).

Gaurav Garg, research analyst at Lemonn Markets Desk, noted that the recent strength in the US dollar had put pressure on precious metals, while rising tensions in the Middle East and mounting inflation concerns continued to keep investor sentiment cautious, thereby clouding expectations around US Federal Reserve rate cuts.