Silver Remains Below $32.50, Amid US Economic Uncertainty
Silver (XAG/USD) prices extended their decline for the second straight session, trading around $32.30 per troy ounce during Asian hours on Monday (05/19). While silver prices have recently faced downward pressure, the downside may be limited due to rising demand for safe-haven assets, driven by growing concerns over the US economic outlook and fiscal stability.
Moody's has downgraded the US credit rating by one notch—from Aaa to Aa1, citing soaring debt levels and rising interest payments. This follows similar downgrades by Fitch Ratings in 2023 and Standard & Poor’s in 2011. Moody’s now projects that US federal debt could rise to around 134% of GDP by 2035, up from 98% in 2023. The widening federal deficit—estimated to reach nearly 9% of GDP—has been attributed to rising debt servicing costs, expanding entitlement spending and falling tax revenues.
Silver has also come under pressure amid improving global risk sentiment. The easing of US-China trade tensions, marked by an initial deal to reduce tariffs—Washington lowered tariffs on Chinese goods to 30% from 145%, and Beijing reduced tariffs on US imports to 10% from 125%—has boosted investor confidence. Further optimism has been fuelled by the prospect of a US-Iran nuclear deal and upcoming talks between US President Donald Trump and Russian President Vladimir Putin aimed at defusing tensions in Ukraine.
However, Silver—a non-yielding asset—may regain some ground as a string of disappointing US economic data raised expectations of further interest rate cuts by the Federal Reserve later this year. Notably, the University of Michigan Consumer Sentiment Index fell sharply to 50.8 in May, down from 52.2 in April, marking its lowest level since June 2022 and the fifth straight monthly decline. Analysts had anticipated an increase to 53.4, highlighting rising pessimism among consumers.
Source: FXStreet
