Silver Rises as US Treasury Yield Rally Pauses
Silver (XAG/USD) prices started 2025 on a strong note. The white metal gained nearly 1.50% in the European session on Thursday (02/01) and rose near $29.40. The asset gained as the US bond yield rally stalled after surging more than 10% in the past four weeks
The 10-year US Treasury yield dipped near 4.55%. Lower yields on interest-bearing assets indicate lower opportunity costs for non-yielding assets, such as Silver, which increases its appeal.
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, traded sideways near a more than two-year high of 108.50.
The outlook for the US Dollar and bond yields is expected to remain strong as the Federal Reserve (Fed) is expected to deliver fewer interest rate cuts this year as officials are optimistic about the path of the economy. Market participants are also optimistic about the US growth prospects under President-elect Donald Trump, as his policies, such as immigration controls, higher import tariffs and lower taxes, are likely to boost overall economic activity.
Analysts at Goldman Sachs expect the Fed to deliver its next rate cut in March. The investment banking firm also expects the 25 basis point (bps) rate cut in March to be followed by two more in June and September, suggesting that lending rates will fall to a range of 3.50%-3.75%. In 2024, the Fed also cut rates three times but by 100 bps to 4.25%-4.50%.
Source: FXStreet
