Silver Price Forecast: XAG/USD declines toward the $67.00 mark amid escalating Middle East tensions.

• Silver prices retreat as renewed military tensions in the Middle East weigh on the recent wave of diplomatic optimism.
• US forces reportedly intercepted and destroyed two Iranian attack drones aimed at commercial vessels near the Strait of Hormuz. Meanwhile, President Trump indicated that a peace agreement with Iran could be reached over the weekend after calling off planned US strikes on Iranian energy facilities. 

Silver prices (XAG/USD) retreat during Friday’s Asian session after surging more than 6% in the previous trading day, with the metal hovering near $67.00 per troy ounce. The pullback comes as renewed military tensions in the Middle East undermine the recent improvement in diplomatic sentiment.

According to Fox News, US forces intercepted and destroyed two Iranian one-way attack drones near the strategically vital Strait of Hormuz after the aircraft allegedly targeted commercial ships. Meanwhile, Iranian state media said the explosion noises reported in Sirik were linked to an encounter with a vessel accused of violating regional maritime restrictions. Tehran claimed the Islamic Revolutionary Guard Corps (IRGC) warned an oil tanker and compelled it to follow the imposed traffic controls.

Even so, hopes for a diplomatic breakthrough remain alive. US President Donald Trump stated that a broad peace agreement with Iran could potentially be completed as soon as this weekend, marking a notable change after he suspended planned US military action against Iranian energy facilities. Although the agreement still awaits formal approval from both sides, Iran’s semi-official Fars news agency suggested Tehran is expected to endorse the proposal. Trump added that the deal would focus on reopening shipping routes through the Strait of Hormuz and securing firm Iranian commitments to halt its nuclear weapons ambitions.

At the same time, geopolitical instability continues to influence global monetary policy and reinforce hawkish central bank expectations. On Thursday, the European Central Bank (ECB) delivered its first interest rate increase since 2023 and revised its inflation outlook higher for both 2026 and 2027. In the United States, producer prices climbed 6.5% year-over-year in May, highlighting persistent inflationary pressure tied to Middle East-related energy disruptions. The data further strengthened market expectations that the Federal Reserve (Fed) could raise interest rates again later this year.