Silver Reaches Two-Month High as US-Iran Tensions Rise and Demand Increases by 5.6%

Silver Prices Surge Amid Rising Geopolitical Tensions

Silver prices continued their rally on Monday, reaching fresh two-month highs as the white metal traded around $84.85, up 5.60% during the day. The surge was driven by rising geopolitical tensions in the Middle East, which pushed investors towards safe-haven assets.

The white metal climbed to fresh two-month highs, surging more than 7% before trimming some gains. Technical indicators and renewed buying interest from hedge funds and leveraged investors helped fuel the rally after many had stayed away from the market in recent weeks.

According to market analysts, trend followers also joined the rally. Options activity in the iShares Silver Trust (SLV) pointed to growing investor optimism, with increased demand for bullish bets on silver prices. The three-month call skew widened to its highest level since early March.

Read also: Gold and Silver Prices Decline Amid Strengthening Dollar and Inflation Concerns

The ongoing conflict between the United States and Iran remains a key driver of market sentiment. US President Donald Trump rejected Iran's latest peace proposal, calling it "totally unacceptable," while talks over the Strait of Hormuz remained stalled. Markets are also watching Donald Trump's two-day visit to China this week, where he is set to meet Chinese President Xi Jinping to discuss Iran, Taiwan, artificial intelligence, and nuclear weapons.

Concerns over possible disruptions to global energy supplies continued to drive volatility in commodity markets and strengthen demand for safe-haven assets like silver. Rising energy prices have also revived inflation worries, leading investors to expect interest rates to stay higher for longer.

Economic data released in the United States on Friday reinforced this view, with Nonfarm Payrolls (NFP) rising by 115,000 in April, sharply above market expectations of 62,000. The unemployment rate remained unchanged at 4.3%. The strong labour market data is seen as giving the Federal Reserve more room to maintain its restrictive monetary policy stance.

Read also: Gold and Silver Prices in India: A Review of Current Rates Across Major Cities

According to the CME FedWatch tool, markets are now pricing in only limited chances of near-term rate cuts, with some investors even considering the possibility of another rate hike later this year. Despite higher interest rates generally weighing on non-yielding assets, silver continues to draw support from robust industrial demand.

Demand from sectors such as photovoltaics, semiconductors, artificial intelligence infrastructure, and electric vehicles remains a key long-term driver for the metal. Investment demand has also remained strong, with several analysts expecting the global silver market to stay in deficit this year as industrial demand is projected to exceed available supply once again.