Mumbai: Silver prices witnessed a sharp recovery on Monday, rising by more than Rs 6,000 per kilogram in futures trade as easing tensions between the United States and Iran improved overall market sentiment.
On the Multi Commodity Exchange (MCX), silver futures for July delivery jumped Rs 6,066, or 2.46%, to Rs 2,52,252 per kg. Trading activity remained strong, with a business turnover of 11,420 lots recorded during the session.
The rally comes after a weak previous week, when silver prices had fallen by Rs 2,351, or nearly 1 percent, to around Rs 2.46 lakh per kg.
US-Iran Agreement Boosts Confidence
The sharp rebound was largely driven by reports that US and Iranian officials had reached an initial agreement to end the conflict between the two countries.
According to reports, the agreement includes the lifting of the US naval blockade on Iran and the reopening of the Strait of Hormuz, one of the world's most important routes for oil transportation.
US President Donald Trump announced on Truth Social that the deal with Iran had been completed and confirmed the reopening of the Strait of Hormuz. The development helped reduce fears of supply disruptions and broader geopolitical risks.
Global Silver Prices Also Rise
The positive sentiment was visible in international markets as well.
Comex silver futures for July delivery climbed USD 2.39, or 3.53%, to USD 70.37 per ounce in New York trading. The metal had declined nearly 2% during the previous week before staging a strong recovery.
Market experts said investors welcomed the possibility of improved stability in the region, which helped support precious metal prices.
Weak Dollar Supports Bullion
According to Renisha Chainani, Head of Research at Augmont, the peace agreement reduced concerns about prolonged inflation and further interest rate hikes.
The announcement also pushed the US dollar to a more than one-week low. A weaker dollar makes silver and other precious metals cheaper for investors holding other currencies, increasing demand.
At the same time, crude oil prices fell sharply, easing inflation worries across global markets.
Focus Turns To Central Banks
Investors are now closely watching the upcoming US Federal Reserve policy decision scheduled for Wednesday.
Markets widely expect interest rates to remain unchanged, but comments from policymakers will be monitored for clues on future monetary policy.
Meanwhile, Axis Securities noted that recent interest rate increases and higher inflation projections in Europe continue to keep concerns alive about a longer period of tight monetary policy.
