Silver Steady Amid Trump Tariff Uncertainty
Silver prices extended their gains for the fifth straight day, trading around $30.10 per troy ounce during Asian trading hours on Wednesday (8/1). Silver, a safe-haven asset, found some support amid uncertainty over tariff policies ahead of Trump’s inauguration. However, Trump dismissed a Washington Post report that his team was considering narrowing the scope of his tariff plans to only target certain essential imports.
In addition, the positive economic outlook in China, the world’s largest consumer of Silver, is strengthening demand for the metal. The People’s Bank of China (PBOC) is working with the State Planner to stimulate the country’s economy. PBOC official Peng Lifeng announced that the central bank will support banks in expanding lending under the trade-in initiative.
However, the price of the dollar-denominated precious metal may decline as a stronger US Dollar (USD) makes it more expensive for buyers using foreign currencies, thereby reducing demand for Silver. The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against a basket of six major currencies, was holding above 108.50 at the time of writing. The greenback gained as the 10-year yield on the US Treasury bond rose more than 1% in the previous session, currently standing at 4.68%.
The surge highlights the changing sentiment of investors towards the Federal Reserve’s (Fed) interest rate outlook following strong US economic data. The latest ISM services report showed an uptick in activity and rising prices in the United States (US), which intensified concerns about persistent inflation. This further weighed on Silver prices, as higher interest rates tend to dampen demand for the non-yielding metal. Traders now focus on the upcoming US jobs data, including the Nonfarm Payroll (NFP) report, as well as the latest FOMC Minutes, for further policy insights.
The US ISM Services PMI increased to 54.1 in November, up from 52.1, beating market expectations of 53.3. The Prices Paid Index, which reflects inflation, rose significantly to 64.4 from 58.2, while the Employment Index fell slightly to 51.4 from 51.5.
Source: FXStreet
