• Silver posts strong gains on Tuesday as buyers take advantage of the recent pullback to re-enter the market.
• The macroeconomic backdrop remains supportive for precious metals despite renewed firmness in the US Dollar.
• A relative easing in geopolitical tensions could, however, cap near-term upside momentum.

Silver (XAG/USD) rebounds sharply on Tuesday and trades around $85.30, up roughly 6.50% on the day at the time of writing. The white metal recovers part of the ground lost during last week’s violent correction, as investors gradually return to the precious metals space amid prices seen as more attractive.

The recent pullback in Silver was largely driven by technical factors, including position unwinding and margin-related liquidations, rather than a clear deterioration in fundamentals. The ongoing rebound highlights an environment still marked by elevated volatility, while demand for real assets remains well supported.

From a macroeconomic perspective, expectations of monetary easing continue to play a key role. Markets are still pricing in the prospect of further rate cuts by the Federal Reserve (Fed), which structurally weighs on real yields and supports the appeal of non-yielding assets such as Silver. The nomination of Kevin Warsh as the next head of the US central bank has provided temporary support to the US Dollar (USD), but this effect is fading as investors refocus on rate cut bets.

Meanwhile, US Dollar dynamics remain a key driver for Silver. The US Dollar Index (DXY) holds near recent short-term highs, which could restrain the white metal’s upside momentum. A firmer Greenback tends to make Silver more expensive for international investors, potentially limiting buying interest.

On the geopolitical front, signs of easing tensions between the United States (US) and Iran, along with the announcement of a trade deal between the US and India, have helped improve market sentiment. This relative de-escalation reduces immediate safe-haven demand and could encourage Silver to enter a consolidation phase following its strong rebound.

Finally, the slowdown in the flow of US economic data, linked to the partial federal government shutdown, keeps uncertainty elevated around the near-term economic outlook. In this context, movements in the US Dollar and expectations surrounding US monetary policy are likely to continue steering the trajectory of Silver in the coming days.