Silver rises as US-Iran tensions drive demand

Finance

Silver rises as US-Iran tensions drive demand

Silver (XAG/USD) trades around $80.20 on Friday at the time of writing, up 2.28% on the session. The white metal consolidates its recent gains as markets adopt a cautious stance ahead of the advance estimate of fourth-quarter Gross Domestic Product (GDP) in the United States (US), due later in the day.

The consensus points to a slowdown in US growth compared with the previous quarter. Signs of moderating activity could reinforce expectations of monetary easing by the Federal Reserve (Fed). Markets continue to price in the prospect of two rate cuts this year, according to futures market expectations. A lower interest rate environment typically supports Silver, a non-yielding asset, by reducing the opportunity cost of holding it.

In addition, investors are monitoring forward-looking activity indicators, notably the Purchasing Managers Index (PMI) reports published by S&P Global in the United States and other major economies. Weaker-than-expected data could add pressure on the US Dollar and extend support for precious metals.

On the geopolitical front, persistent tensions between the US and Iran continue to sustain demand for safe-haven assets. Recent statements from US officials suggesting the possibility of further actions in the Middle East maintain a climate of uncertainty. In this context, Silver benefits from dual support, linked both to expectations of a more accommodative monetary policy and to demand for protection against geopolitical risks.

Therefore, despite a degree of caution ahead of key macroeconomic releases, the bias remains constructive for XAG/USD as long as rate cut expectations and international tensions continue to bolster the appeal of precious metals.