Silver slips as Iran tensions weigh despite softer US inflation data

Silver prices edged lower on Wednesday as escalating geopolitical tensions in the Middle East dampened investor sentiment, offsetting support from a weaker US Dollar following softer-than-expected US inflation data.

At the time of writing, Silver (XAG/USD) traded at $58.50, after facing rejection near the $59.00 level during Tuesday's session.

Although the US Dollar weakened after the latest inflation report, broader risk aversion continued to pressure the precious metal.

Weaker US Dollar fails to support Silver

The US Dollar extended its losses on Tuesday after the Consumer Price Index (CPI) came in softer than expected.

The data reduced market expectations of immediate interest rate hikes by the Federal Reserve.

Despite the weaker Dollar, Silver struggled to attract sustained buying interest as geopolitical developments overshadowed currency-driven support.

Rising Iran tensions weigh on market sentiment

Investor risk appetite remained subdued as hostilities involving Iran intensified.

The US military resumed the blockade of the Strait of Hormuz for Iranian vessels, while US President Donald Trump threatened to target civilian infrastructure, including power plants and bridges.

In response, Tehran warned that it could shut down other energy routes.

The renewed tensions kept investors cautious, supporting higher energy prices while weighing on precious metals.

Technical indicators suggest fading downside momentum

From a technical perspective, Silver continued to trade below key resistance levels.

On the four-hour chart, XAG/USD traded around $58.32, remaining beneath the descending trendline resistance drawn from the late-May highs.

Technical indicators showed early signs that bearish momentum may be easing.

The Relative Strength Index (RSI-14) recovered toward the neutral 45 level, while the Moving Average Convergence Divergence (MACD) turned slightly positive.

However, bullish signals remained limited, suggesting buyers have yet to regain firm control of price action.

Oil extends gains as geopolitical risks intensify

Oil prices moved higher on Wednesday following the latest developments in the Middle East.

Brent crude futures climbed 0.96% to $85.54 a barrel, while West Texas Intermediate (WTI) crude futures gained 0.66% to $79.98 a barrel.

The gains came after US President Donald Trump reimposed a naval blockade on all Iranian ports.

Gold retreats after inflation-driven rally

Gold prices also moved lower on Wednesday as markets shifted their focus from softer US inflation to the inflationary risks posed by higher energy prices.

Spot gold fell 0.5% to $4,035.67 an ounce by 0300 GMT, while August gold futures declined 0.7% to $4,042.20.

The pullback erased part of Tuesday's rally, during which bullion had surged more than 2% to reach $4,100.49 after June consumer price data came in below expectations.

Market participants are now balancing two competing themes.

For now, precious metals remain caught between the supportive effect of a weaker US Dollar and the broader uncertainty created by escalating geopolitical tensions, while oil continues to benefit from concerns over supply disruptions.