Silver Rebounds Off Its Lowest Since December as the Hormuz Deal Nears Signing

The Catalyst

Silver's 19-hour bounce to around $65.96 lines up with one thing: Washington signaling that an Iran deal is close. Trump says a settlement has been reached and a signing could come as soon as this weekend, and the terms reported by Axios are exactly what silver wants — a 60-day ceasefire during which the Strait of Hormuz reopens with no tolls, Iran clears the mines it laid, and Iranian oil flows again in exchange for US sanctions waivers. Hormuz is the whole story here. Its partial closure is what poured energy costs into the inflation data and turned a precious metal into a casualty, so headlines pointing at a reopening are doing the lifting, not a fresh haven bid.

Why a Geopolitical Shock Sold Silver

On paper, conflict in the Gulf plus the hottest inflation since 2022 should be a precious-metals bid. Silver did the opposite — it fell roughly 24% in a month and printed its lowest level since December near $63. The reason is silver's split personality: it trades as much like a rate-sensitive industrial metal as a safe haven. The Hormuz oil shock drove May PPI to 6.5% year over year, the hottest wholesale print since November 2022, almost all of it energy. That repriced the Fed — futures now see the next move as a hike, not a cut, with December odds better than even and March above 70%. The ECB raised rates Thursday for the first time since 2023. Higher-for-longer rates punish a non-yielding metal, and recession fear chips at its industrial demand. So the same shock that should have lifted silver buried it — and de-escalation runs that tape in reverse.

The Supply Wrinkle Few Are Pricing

Here's the part the rate-hike narrative misses. The Hormuz closure doesn't just push oil — it chokes roughly 30% of global sulfuric acid exports, and because roughly 56% of mined silver comes out as a byproduct of copper and nickel refining (which runs on sulfuric acid), a sustained disruption actually constrains silver supply. Layer that onto a market where 2026 is the sixth straight year of structural deficit — more silver consumed than mined — and you get the irony that the bearish macro driver and a bullish supply squeeze share the same root cause. J.P. Morgan still carries an $81/oz average forecast for 2026 against a spot price in the mid-$60s, which tells you how violently sentiment has overshot the fundamentals.

The Levels and the Risk

This is a relief bounce, not a confirmed turn. Silver is still down on the day even after the pop, and it sits well below the $121.64 all-time high set in January — though it's also up about 82% year over year, so context cuts both ways. The line that matters is $68: reclaim it and the chart opens toward $72 and then $80; fail, and a death cross that's been forming keeps the tape heavy. The catalyst itself is fragile — the deal is still unsigned and Trump has already canceled and restarted strikes, so a single headline can put the entire Hormuz premium back into oil and flip silver's whole rate trade against it again.