Silver (XAG/USD) traded near $79.70 on Monday at the time of writing, down 1.12% on the day. Trading was subdued ahead of monetary policy decisions from major central banks, with attention on the US Federal Reserve. Markets expect the Fed to keep its benchmark interest rate unchanged at 3.50%–3.75% at Wednesday’s meeting, according to the CME FedWatch tool. If that happens, it would be the second straight hold after the previous easing cycle. A longer pause in rate cuts can weigh on non-yielding assets such as Silver. Higher expected interest rates raise the opportunity cost of holding precious metals. Inflation worries linked to rising energy prices are also affecting market pricing. Middle East tensions have lifted Oil prices and increased concerns about ongoing inflation pressure. Higher US petrol prices are adding to household costs and may keep inflation expectations elevated. This can support expectations that policy will stay restrictive for longer. Geopolitical events are also influencing sentiment in precious metals. The US targeted Iran’s main Oil export hub on Kharg Island, raising concerns about supply disruption. Washington has said the conflict could end within weeks and has discussed an international coalition to protect shipping in the Strait of Hormuz. Ongoing tensions are still creating uncertainty, which can support demand for safe-haven assets such as Silver. We are watching silver closely as it fluctuates around the $25.50 mark this week. Much like the situation we saw back in 2025, the market is caught between two opposing forces. Traders are weighing the Federal Reserve’s next policy move against a backdrop of lingering global risks. Last year, we were dealing with the Fed pausing its easing cycle with rates around 3.50%-3.75%, which capped silver’s potential. Now in March 2026, even after rates have been cut to the 3.00%-3.25% range, the latest Consumer Price Index reading of 3.4% has traders reducing bets on another cut in May. This renewed prospect of higher-for-longer rates creates a headwind for non-yielding silver. Inflationary pressures, while lower than their peaks, remain a primary concern for policymakers. While WTI crude oil prices have stabilized below the highs seen during the Middle East tensions of 2025, they remain elevated enough to influence household costs. This stickiness in inflation supports the view that the Fed will remain cautious, limiting the upside for precious metals in the near term. However, we cannot ignore the geopolitical floor that continues to support silver prices. Looking back to the tensions surrounding Iran’s oil exports in 2025, we see how safe-haven demand can quickly emerge and cushion declines. While the international coalition has maintained shipping security, the underlying risk in the region persists, providing a reason for traders to maintain some exposure to precious metals. For derivative traders, this environment suggests that buying outright calls could be risky given the pressure from interest rate expectations. Instead, strategies like purchasing protective puts to hedge long positions or considering call spreads could manage risk while allowing for potential gains if prices move higher on unexpected news. The high level of uncertainty also makes volatility plays, like straddles, an option for those anticipating a sharp price move in either direction after the next Fed announcement.

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