Silver price (XAG/USD) extends its gains for the second successive day, trading around $58.70 per troy ounce during the Asian hours on Tuesday. Silver prices are receiving support as non-yielding assets benefit from geopolitical and economic monitoring.
Investors are closely tracking developments in United States (US)-Iran talks for signals regarding the potential reopening of the Strait of Hormuz, while simultaneously evaluating the broader outlook for US Federal Reserve monetary policy.
Diplomatic tensions remain high after US President Donald Trump described his latest offer of discussions as a “last chance” for Iran, following his decision to call off a major military strike. Trump expressed expectations that formal negotiations would begin shortly to secure the Strait of Hormuz and address long-standing US concerns over Iran’s nuclear program.
However, Iranian leadership quickly dismissed the proposal. General Mohsen Rezaei, an advisor to Iran’s Supreme Leader, firmly rejected the conditions, declaring that Iran will absolutely not permit a second corridor in the Strait. He further warned that any foreign warships or military forces deployed for that purpose would be targeted.
On the monetary policy front, market participants continue to recalibrate their expectations following the central bank’s decision to hold interest rates steady in July. According to the CME FedWatch tool, markets are currently pricing in approximately a 65% chance of a 25 basis point rate hike at the Federal Reserve’s upcoming September meeting.
Williams reiterates confidence in Fed path as markets weigh inflation risks
Fed’s Williams delivers a moderately hawkish message, with a 6/10 FXS Speechtracker score slightly above the 5.8/10 historical average, underscoring confidence that current rate policy is “well positioned” to achieve the 2% inflation goal. The repeated commitment to act if inflation drifts off the 2% path, alongside optimism that price pressures will gradually ease and that the Middle East war’s inflation impact will cool, signals a steady-hawk stance rather than an aggressive tightening bias. Acknowledgment of market pricing as “valuable information” but not binding, and the dismissal of financial stability risks from AI investment, reinforces a message of policy patience within a firmly anti-inflation framework.
The FXS Fed Sentiment Index fell by 1.47 points to 146.76, indicating a modest pullback in perceived hawkishness even as the index remains deep in hawkish territory above the 100 neutral line. This suggests that, despite the slightly stronger-than-baseline tone captured by the FXS Speechtracker, markets see Williams’ remarks as consistent with an already well-telegraphed Fed stance rather than a fresh hawkish escalation.
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