HG MARKETS: 

Silver prices continued to weaken on Monday, with XAG/USD dropping more than 1% during the European session to trade near the $75 level. The white metal extended its sharp two-day decline as rising global inflation concerns weighed heavily on precious metals sentiment. Investors have become increasingly cautious after oil prices surged amid fears of renewed conflict between the United States and Iran, a development that could further disrupt global energy supplies and intensify inflationary pressures across major economies.

The rally in crude oil has been a major driver behind the recent market volatility. WTI crude prices climbed toward $103.86 per barrel, marking their highest level of the month, as traders worried about the possibility of a prolonged disruption in the Strait of Hormuz, one of the world’s most critical oil shipping routes. Market fears intensified after US President Donald Trump issued a strong warning to Iran through a post on Truth Social, threatening severe consequences if Tehran failed to agree to a deal. The escalating geopolitical tensions have fueled concerns that energy prices may remain elevated for an extended period, increasing the risk of persistently high global inflation.

Higher inflation expectations have pushed government bond yields sharply higher, creating a negative environment for non-yielding assets such as Silver and Gold. The benchmark 10-year US Treasury yield rose to around 4.62%, while UK 10-year gilt yields surged near 5.19%, their highest level since the sub-prime financial crisis. Investors now believe central banks may need to maintain tighter monetary policies for longer to combat inflation. In the United States, expectations for Federal Reserve interest rate cuts this year have faded significantly, with traders increasingly pricing in the possibility of at least one rate hike before year-end. The probability of a Fed rate increase now stands at 54.5%, marking a dramatic shift from earlier expectations that the central bank would deliver two rate cuts during calmer market conditions.

From a technical perspective, Silver remains under bearish pressure as prices continue to trade below the 20-day Exponential Moving Average (EMA) at $78.59. Momentum indicators also point to weakening bullish sentiment, with the 14-day Relative Strength Index (RSI) hovering near 44.77, suggesting that rebounds may continue to attract selling interest while prices remain capped below the $77–79 range. If Silver fails to hold support near the upward-sloping trendline of the Ascending Triangle pattern around $75.00, the metal could decline toward the $70 region, followed by the March 26 low near $66.71. On the upside, a sustained recovery above the 20-day EMA would be required to ease downside pressure and potentially open the door for another move toward the $80 level.