Silver price forecast: can XAG/USD hold its rebound as Iran fears jolt markets?

Silver recovered on Thursday after sliding to an 11-week low, as safe-haven demand and industrial buying helped the metal regain ground even as investors remained cautious over rising Middle East tensions and the US interest-rate outlook.

Silver price, or XAG/USD, traded around $64.00 per troy ounce during Asian hours, recovering from an intraday low of $61.50.

The rebound followed two straight sessions of losses and reflected the metal’s unusual position in global markets: it is both a defensive asset in periods of stress and a key input for industrial sectors including electronics, solar panels and electric vehicles.

The recovery, however, remained fragile.

A fresh round of US airstrikes on Iran has raised the risk of a longer conflict in the Middle East, unsettling broader markets and adding to fears that higher energy costs could keep inflation elevated.

Silver finds support after sharp fall

Silver’s bounce came after a steep decline pushed prices towards levels that encouraged some traders to cover short positions and others to rebuild exposure.

Unlike gold, silver often draws support from two sides of the market.

It can benefit from safe-haven demand when geopolitical risks rise, while its industrial use gives it an added link to expectations for manufacturing and clean-energy demand.

That dual role helped stabilise prices after the drop to $61.50.

Still, the upside looked limited as investors weighed whether geopolitical risks would increase demand for defensive assets or instead worsen inflation pressures enough to keep central banks hawkish for longer.

A stronger rate outlook can hurt silver because the metal does not offer a yield.

When bond returns rise, investors often become less willing to hold precious metals unless the risk backdrop is severe enough to justify defensive positioning.

Iran conflict keeps markets on edge

Geopolitical concerns remained central to the move after US Central Command confirmed that the US had begun airstrikes in Iran on Wednesday.

Washington described the action as a response to continued aggression after an American helicopter was reportedly shot down, triggering Iranian retaliation against US military facilities in Bahrain, Jordan and Kuwait.

President Donald Trump warned that Iran would be hit “very hard” if an interim peace agreement was not finalised, accusing Tehran of intentionally delaying talks.

Iranian officials have said they will not back down, raising concern that the conflict could broaden.

For commodities, the main risk is energy. Any prolonged disruption in the Middle East could push oil prices higher, feeding into transport and production costs and complicating the inflation outlook.

That prospect has kept traders cautious, even as safe-haven demand has offered support to precious metals.

Fed outlook hinges on fresh data

The inflation backdrop has become more difficult for markets after May US consumer prices rose at their fastest pace in more than three years.

The increase was driven largely by higher energy costs linked to the Middle East conflict, although the data came broadly in line with expectations.

Markets are now waiting for the May Producer Price Index and initial jobless claims, both of which could help shape expectations for the Federal Reserve’s next policy move.

Traders have modestly trimmed some rate-hike expectations, but a quarter-point increase by December remains fully priced in.

That leaves silver caught between two forces: geopolitical stress that supports demand for havens and a higher-for-longer rate outlook that limits the appeal of non-yielding assets.

For now, silver’s rebound suggests buyers are willing to defend lower levels, but the next move may depend on whether US inflation data reinforces the case for tighter Fed policy or gives precious metals room to extend their recovery.