• Silver moves higher during the European session, trading around $68.50.
• Geopolitical tensions in the Middle East continue to fuel market uncertainty.
• Rising inflation expectations weigh on the appeal of non-yielding assets.

Silver (XAG/USD) trades around $68.50 on Friday at the time of writing, up 0.59% on the day, supported by renewed investor interest. Despite this uptick, the white metal remains within a broadly sideways trend, as market participants stay cautious amid an uncertain macroeconomic environment.

The geopolitical backdrop remains a key driver. Hopes for de-escalation in the Middle East are fading after reports suggested that Iran did not request a pause in planned US strikes on its energy infrastructure. This casts doubt on statements from US President Donald Trump, who had previously indicated that attacks were postponed at Tehran’s request. The situation continues to fuel volatility across financial markets.

In this context, Oil prices remain elevated, notably due to ongoing tensions around the Strait of Hormuz. Higher energy prices are reinforcing global inflation expectations, reshaping the outlook for monetary policy across major economies.

Investors are now reassessing the interest rate path, pricing in a more restrictive environment for longer than previously expected. The Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of England (BoE) may be forced to maintain tighter monetary conditions to contain inflationary pressures.

This shift is weighing on Silver, a non-yielding asset, as rising bond yields increase its opportunity cost. At the same time, the strength of the US Dollar (USD), supported by higher rate expectations, is also limiting the metal’s upside by making it more expensive for non-USD investors.

Against this mixed backdrop, Silver price action remains dependent on the balance between safe-haven demand and macroeconomic pressures linked to interest rates and inflation, pointing to a still fragile near-term outlook.