Silver Prices Surge Near $33 On US Economic Slowdown Fears, US CPI Eyed
Silver (XAG/USD) prices rose near $33.00 in European trading hours on Wednesday (3/12), the highest level seen in more than two weeks. The white metal strengthened as deepening fears of a US economic slowdown have weakened the US Dollar (USD). The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, was slightly higher but remained near a more than four-month low of 103.35.
Investors are betting the US economy is exposed to a recession as President Donald Trump’s tariff policies could weigh on consumer demand in the near term, assuming the tariffs will be inflationary. Fears of a US recession increased after comments from US Commerce Secretary Howard Lutnick in a CBS interview on Tuesday suggested that the President’s policies were helpful despite concerns that they could lead to a recession. The appeal of precious metals, such as Silver, increases when economic uncertainty increases.
The increasing risks to the US economy have fueled expectations that the Federal Reserve (Fed) could cut interest rates sooner than expected. According to the CME FedWatch tool, there is a 42% chance that the central bank will cut interest rates in May, up significantly from the 10.4% seen a month ago. For fresh guidance on the Fed’s monetary policy outlook, investors are awaiting the US Consumer Price Index (CPI) data for February, due out at 12:30 GMT.
Economists expect headline inflation to rise at a slower pace of 2.9% year-on-year, compared with the 3% increase seen in January. In the same period, core CPI – which excludes volatile food and energy prices – is expected to have slowed to 3.2% from the previous reading of 3.3%.
Source: FXStreet
