XAG/USD Under Pressure Near $57.50 Despite Lower Odds of Fed Rate Increases

Silver prices could find support as renewed US-Iran peace negotiations ease oil prices and reduce concerns over further interest-rate hikes. Former US President Donald Trump cautioned that military action against Iran could resume if diplomatic efforts fail. Meanwhile, markets widely expect the Federal Reserve to leave rates unchanged at this week’s meeting, with any potential rate increase likely postponed until September.

Silver prices (XAG/USD) retreated during Tuesday’s Asian session after posting gains of nearly 0.5% in the previous trading day, slipping toward the $57.50-per-ounce area. Despite the decline, the precious metal could find support as easing tensions between the United States and Iran continue to weigh on oil prices, helping to reduce inflation concerns and dampen expectations for further interest-rate increases.

Market sentiment improved after US President Donald Trump stated that Washington is engaged in constructive discussions with Iran aimed at resolving the Middle East conflict. However, he warned that military operations could resume if diplomatic efforts fail. His comments followed a pause in US airstrikes late last week after nearly two weeks of conflict, while Iran also halted retaliatory attacks on US military facilities in neighboring countries.

The United States has now gone three consecutive days without launching new strikes after suspending its 13-night military campaign. Meanwhile, Iran’s Foreign Ministry denied that direct negotiations with Washington are underway, emphasizing that its ongoing discussions are limited to Oman and focus on the future of the Strait of Hormuz.

Investors are now closely watching this week’s Federal Reserve policy meeting. The Fed is broadly expected to leave interest rates unchanged, although persistent inflation pressures have prompted a small group of traders to consider the possibility of an immediate hike. Nevertheless, the dominant market view remains that any further tightening would more likely be postponed until September.