Silver surges over 3% to reclaim $58, 10-day ceasefire proposal triggers short covering—can the rebound continue?

　　During the Asian session on Tuesday (July 21),

　　WTI Crude Oil prices pulled back after hitting a monthly high of $84.60 on Monday, currently trading near $82, down about 0.45% on the day. The immediate catalyst for oil’s correction was a shift in geopolitical news—Iran confirmed receipt of a mediator's proposal for a 10-day ceasefire.

　　Drivers: 10-day ceasefire proposal triggers marginal drop in geopolitical risk premium

　　The key driver for the silver price rebound comes from geopolitics.

　　Iran confirmed that mediators have submitted a 10-day ceasefire proposal to Tehran, aiming to seek a path to restart the interim agreement reached last month. This news reignited market optimism for US-Iran diplomatic talks, and eased concerns over energy supply at the margin.

　　Previously, escalating US-Iran military tensions drove oil prices higher, triggered concerns about unanchored global inflation expectations, and in turn, strengthened rate hike expectations from major central banks—this logic chain consistently suppressed the performance of non-interest-bearing assets like silver.

　　Now, as oil prices correct, this logic is loosening, with short covering pushing silver higher.

　　Monetary Policy Context: The Fed likely to remain on hold next week

　　On the monetary policy front, according to the latest CME FedWatch tool data, markets widely expect the Federal Reserve to keep rates unchanged at next week's policy meeting. This expectation is fully priced in, and traders have accordingly adjusted the probability of a rate cut in September.

　　However, analysts caution that, in the current high oil price environment, the energy shock continues to support inflation expectations. The US-Iran conflict has kept oil prices elevated, causing the Fed to focus more closely on the risk of rising inflation rather than minor improvements in the labor market. The transmission effect of energy costs into core inflation may lengthen the period of high inflation.

　　As long as energy prices remain elevated, the Fed is unlikely to send clear easing signals in the near term—this fundamental constraint has not been fundamentally changed by the recent ceasefire proposal. Fed officials will need to see a substantial retreat in oil prices and renewed signs of a downtrend in inflation data before considering a policy shift.

　　Against this background, market expectations for the Fed's future moves have become more cautious. Overall, energy factors are a key variable constraining the pace of monetary easing, and global asset pricing will continue to be affected as a result.

　　Institutional Views

　　ING says silver will moderately outperform gold, with core support from ongoing market shortages and the broad electrification trend. The global silver supply/demand deficit is expected to persist through 2026. While industrial consumption is seeing a slight dip due to high prices (silver-thrifting in PV and other sectors), demand remains resilient in AI, automotive electronics, and new energy sectors.

　　ING believes that the energy transition is the basis for silver's long-term bull market, but short-term fluctuations are mainly driven by macro-financial conditions. If the Fed eases more than expected or if geopolitical risks escalate, silver could see a rapid rebound.

　　Macquarie Bank states that high inflation and rising bond yields have put downside pressure on precious metals, and silver previously outperformed gold but is now more prone to sharp pullbacks. History shows its volatility is markedly higher than gold.

　　Macquarie points out that although supply-demand fundamentals remain tight (multi-year deficits), a strengthening dollar, profit taking, and continued silver thrifting in industry could dominate the short-term trend.

　　The institution advises caution, focusing on Fed policy signals and global economic growth data. In a highly volatile environment, diversified allocation and buying on dips are more suitable strategies.

　　The bank sees silver’s long-term potential as intact, but warns of pullback risks in 2026, suggesting to wait for clearer easing catalysts.

　　Technical Analysis

　　From an indicator perspective, MACD is below the zero line, with DIFF at -2.611 moving upwards and close to forming a low-level golden cross with DEA at -2.870, showing a faint red bar—indicating waning bearish momentum. RSI is at 42.91, slightly below the midline and not yet oversold, suggesting that the short-term rebound is weak and there are no strong reversal signals for now.

　　Summary

　　Silver surged over 3% on Tuesday to near $58.60, catalyzed by a temporary pause in oil’s rally—Iran confirmed receipt of a 10-day ceasefire proposal, the market rekindled hopes for a US-Iran diplomatic thaw, energy supply worries eased at the margin, triggering silver short covering. The core logic chain that previously suppressed silver (rising oil→inflation worries→rate hike expectations→pressure on silver) is showing signs of loosening.

　　The market widely expects the Fed to keep rates unchanged next week, but high oil prices continue to support inflation expectations and the sustainability of silver’s rebound remains to be seen.

Editor: Zhu Henan