- Silver price remains steady as the US Dollar weakens amid growing concerns over a potential US economic slowdown.
- Silver may encounter resistance as the Federal Reserve holds its outlook for two rate cuts later this year.
- Improved risk sentiment and the White House’s revised tariff strategy could exert downward pressure on Silver prices.
Silver price (XAG/USD) edges higher on Monday, trading around $33.10 per troy ounce during Asian hours after three consecutive sessions of losses. The rebound is driven by a weaker US Dollar as concerns over a potential US economic slowdown grow due to trade policies under President Donald Trump.
The US Dollar Index, which measures the USD against six major currencies, halts its three-day winning streak and trades lower near 104.10. Meanwhile, market participants await the preliminary reading of the US S&P Global Manufacturing PMI for March.
However, Silver may face headwinds as the Federal Reserve (Fed) maintains its outlook for two rate cuts later this year, following its decision to keep the federal funds rate at 4.25%–4.5% during its March meeting. The Fed's stance, aligning with forecasts of slower GDP growth and higher unemployment, helps counterbalance inflation concerns, which may be exacerbated by aggressive tariffs imposed by President Trump.
Additionally, Silver prices could come under pressure from safe-haven flows amid improved risk sentiment as the White House revises its tariff strategy ahead of the April 2 implementation. According to the Wall Street Journal, the administration is expected to drop some industry-specific tariffs while imposing reciprocal tariffs on countries with strong trade ties to the US.
Additionally, geopolitical tensions ease following talks between Ukrainian and US officials in Riyadh on Sunday. Efforts to broker a ceasefire continue, with President Trump advocating for an end to the three-year war. Ukrainian Defense Minister Rustem Umerov discussed measures to safeguard energy and critical infrastructure, while US and Russian delegates are set for separate talks on Monday, according to Bloomberg.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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