Silver Surges Above $60 on Hormuz Optimism and Falling Oil Prices

The price of silver has broken above $60 as optimism grows over a potential reopening of the Strait of Hormuz, easing concerns over global energy supplies and reshaping Federal Reserve expectations.

This development is driving a broader precious metals rally, with gold also rising in response to falling oil prices. The decline in oil prices is significant because it reduces the likelihood of additional Fed rate hikes, which has led to a decrease in Treasury yields. This shift in market sentiment is particularly beneficial for silver, as roughly half of its demand comes from industrial applications.

While there are still risks associated with the Hormuz situation, investor optimism has grown following comments from US Treasury Secretary Scott Bessent and reports suggesting negotiations are progressing. However, it's essential to note that none of these developments confirm a permanent reopening of the Strait, and markets rarely wait for certainty, they price changing probabilities.

The shift in Fed expectations is evident in the probability of rate hikes this year, which has dropped from 20% a week ago to 0% currently. The US 10-year yield has also fallen from 4.75% to 4.63% this week, easing one of the key headwinds for precious metals.

Technically, silver's price action suggests that the consolidation from $60.92 likely ended at $56.54, keeping the rebound from $54.77 intact. A decisive break above $60.92 targets $62.69 and then $66.49, but the rally remains a corrective structure rather than a confirmed secular uptrend.