Silver Drops Towards $30.50 on Risk Sentiment
Silver (XAG/USD) prices fell for the third straight day, trading around $30.60 per troy ounce during the Asian session on Tuesday (12/11). The precious metals sector, including Silver, faced pressure due to reduced demand for safe-haven assets.
Traders are increasingly turning to riskier assets as markets assess the potential impact of US President-elect Trump’s fiscal policy and monetary strategy. The possibility of tariffs being implemented early in Trump’s term could lead to inflation, which in turn could cause the Federal Reserve (Fed) to delay its expected easing measures in the coming year.
Consequently, dollar-denominated Silver is also struggling amid a stronger Greenback and rising US Treasury yields. The US Dollar Index (DXY), which tracks the US Dollar against a basket of six major currencies, is hovering near a four-month high of 105.70. Meanwhile, the 2-year and 10-year US Treasury yields were at 4.28% and 4.32%, respectively, at the time of writing.
China’s latest stimulus measures have fallen short of investors’ expectations, undermining earlier hopes of industrial support in the largest manufacturing hub and negatively impacting the outlook for industrial metals overall. This has put additional pressure on Silver, which has significant use in electrification, particularly in solar panels.
Last week, China announced a 10 trillion Yuan debt package aimed at easing local government financing pressures and boosting the economy. However, the package did not include direct economic stimulus measures, which many had expected.
Meanwhile, Chinese solar panel manufacturers have started to cut production, partly due to concerns that Trump’s election victory in the US could lead to higher tariffs on the sector. Morgan Stanley has estimated that the Trump administration could impose immediate tariffs of 60% on Chinese imports.
Source: FXStreet
