iShares Silver Trust (NYSE:SLV) shares are slumping on Tuesday as silver pulls back in response to a strengthening U.S. dollar as tensions in the Middle East escalate and investors reassess the inflation outlook and fading prospects for rate cuts.
Dollar Strength Weighs On Silver
Silver is retreating as the U.S. dollar continues to gain strength. A stronger dollar typically pressures precious metals because it makes the assets more expensive for buyers using other currencies. This dynamic has been especially pronounced during the current geopolitical shock, where markets are moving from pricing negotiation risk to grappling with deeper regime‑level uncertainty in Iran.
The conflict continues to intensify, with Iranian state media confirming the death of Supreme Leader Ali Khamenei and Israel launching additional strikes on Tehran. U.S. and Israeli military actions have destroyed Iranian command posts and missile sites, and the region remains on edge as the situation enters its fourth day.
Oil Spike Complicates The Fed's Path
The surge in oil prices is adding another layer of pressure. Crude has jumped sharply as investors fear the conflict could disrupt supply routes, particularly through the Strait of Hormuz — a chokepoint for roughly one‑fifth of global oil flows. Rising energy prices tend to push inflation higher, making it harder for the Federal Reserve to justify rate cuts. This environment is boosting the dollar and putting pressure on metals like silver.
At the same time, more than 150 oil and liquefied natural gas (LNG) tankers are now backed up outside the Strait of Hormuz, unable to move through the crucial passage, which is adding another layer of stress to global markets.
SLV Price Action: iShares Silver shares were down 7.52% at $75.44 at the time of publication on Tuesday, according to Benzinga Pro.
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