Silver Rises Above $33.00, Supported By Safe-Haven Demand
Silver (XAG/USD) prices moved higher after posting a loss of more than 1% in the previous session, hovering around $33.10 per troy ounce during Asian trading hours on Friday (05/23). Manufacturing-sensitive commodities, including Silver, are facing challenges amid growing concerns over the widening fiscal deficit in the United States (US). However, rising safe-haven demand amid fiscal concerns could offset the demand-related threats surrounding the commodity.
On Thursday, US President Donald Trump’s “One Big Beautiful Bill” was passed by the US House of Representatives and is on its way to the Senate. The House approved Trump’s budget by a single vote. The proposal is expected to increase the deficit by $3.8 billion, as it will provide tax breaks on tip income and loans for US-made cars, according to the Congressional Budget Office (CBO).
Silver attracted sellers as the uncertain US economic conditions, coupled with tariff concerns, undermined the strong momentum of the photovoltaic industry. Silver is used in a variety of industrial applications, such as electronics, solar panels, and automotive components.
In the first quarter of 2025, China's wind and solar capacity increased to nearly 1,500 GW due to a 60 GW surge in photovoltaic power. Given China's status as one of the world's largest manufacturing hubs, the country's industrial demand for Silver is quite significant. In addition, solar power production in Europe also jumped by 30% annually in the first quarter.
Moody's downgraded the US credit rating from Aaa to Aa1 and estimated that US federal debt is expected to increase to around 134% of GDP in 2035, up from 98% in 2023, with the budget deficit expected to widen to nearly 9% of GDP. The downgrade was due to rising debt servicing costs, expansion of entitlement programs, and declining tax revenues.
Source: FXStreet
