Silver climbs sharply as Iran threatens US warships in Strait of Hormuz

Silver surged on Tuesday, August 4, climbing more than 3% to trade near $59.50 per ounce as an escalation in US-Iran tensions over the Strait of Hormuz drove renewed safe-haven buying into precious metals. The move outpaced gold's gains, reflecting silver's heightened price elasticity as both a precious and industrial metal during periods of geopolitical stress.

Iran's Warning Raises the Stakes

The rally was triggered by sharp rhetoric from Major General Mohsen Rezaei, a senior adviser to Iran's Supreme Leader and former commander of the Islamic Revolutionary Guard Corps. Rezaei warned that Iran would not permit the creation of an "unauthorised route" through the Strait of Hormuz and said US vessels could face "serious consequences" if they attempted to force one open. The statement went beyond a simple denial of diplomacy, escalating into an explicit threat of military confrontation.euronews+1

The warning came after President Trump characterized his latest overture to Tehran as Iran's "last chance" for a deal, while Iran denied that any negotiations were under way or planned. US Central Command said it had redirected 44 commercial vessels, disabled two, and boarded two as part of an ongoing naval blockade, underscoring the operational risks in the waterway through which roughly a fifth of global oil transits.linkedin+1

Silver's Dual Drivers

According to Trading Economics, silver rose to $59.42 on August 4, up 3% from the previous session. Yahoo Finance reported that silver reached $59.50 during the morning session, while spot silver was quoted at $58.88 earlier in the Asian session.coinpaper+2

The metal's gains were underpinned by its dual role. As a precious metal, silver benefits from the same safe-haven flows as gold during geopolitical crises. As an industrial commodity used in solar panels, electronics, and electric vehicles, it also responds to shifts in global growth expectations. Analysts surveyed by Reuters expect silver to average about $71.90 per ounce in 2026, while UBS forecasts a rebound to $65 by September.moomoo+1

Rate Hike Expectations Cap Upside

Despite the rally, silver's advance remains checked by monetary policy expectations. The CME FedWatch Tool indicates a roughly 65% probability that the Federal Reserve will raise rates by 25 basis points at its September meeting. New York Fed President Williams reiterated that policy is "well positioned" to achieve the 2% inflation target and that the Fed would act if inflation deviates from its path. Traders are now watching Friday's US employment data for further clues on whether that probability will rise above 70%, which could pressure non-yielding metals in the near term.moomoo+1