Silver Strengthens Near $32.50 As USD Index Slides On US Economic Concerns
Silver (XAG/USD) prices surged sharply near $32.50 in the European session on Tuesday (2/11). The white metal strengthened as the US Dollar (USD) faced a sharp sell-off, with investors cautious about the US economic outlook due to President Donald Trump's tariff agenda. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, fell near 103.35, the lowest level seen in four months. A lower US Dollar makes precious metals, such as Silver, more attractive to investors.
Market participants are concerned that President Trump's tariff policies will lead to an economic slowdown in the US. On Friday, Trump said, "There is a transition period because what we are doing is very big." Historically, transition periods result in short-term economic turbulence. Signs of rising economic tensions increase safe-haven demand for precious metals, such as Silver.
Meanwhile, investors await the US Consumer Price Index (CPI) data for February, due for release on Wednesday. Investors will be watching US inflation data as it will influence market speculation on the Federal Reserve’s (Fed) monetary policy outlook. US CPI data is expected to grow at a slower pace. Any signs of slowing inflationary pressures will boost market expectations that the Fed will cut interest rates at its May policy meeting. The probability of the Fed cutting rates in May has increased to 51% from 37% a day ago, according to the CME FedWatch tool. The lower interest rate scenario bodes well for non-yielding assets, such as Silver.
Source: FXStreet
