Silver Holds Below $33.50 As Safe-Haven Demand Eases
Silver prices eased after posting gains in the previous two sessions, trading around $33.30 per troy ounce during Asian hours on Tuesday (05/27). The grey metal attracted sellers as waning safe-haven demand amid easing trade tensions between the United States (US) and the European Union (EU) boosted traders’ risk appetite.
Following Trump’s threat on Friday to impose 50% tariffs on imports from the European Union, the US President decided to extend the deadline for tariffs on the European Union (EU) after a phone call with European Commission President Ursula von der Leyen on Sunday. On Monday, the EU agreed to speed up negotiations with the United States (US) to avoid a transatlantic trade war.
However, safe-haven Silver may regain its position amid growing concerns over the US debt problem ahead of Trump’s “One Big Beautiful Bill” passing through the Senate floor for a vote. The bill is expected to increase the deficit by $3.8 billion, according to the Congressional Budget Office (CBO).
The provisions of the bill, including tax cuts, increased spending, and an increase in the debt ceiling, could worsen the US government’s finances and increase the risk that bond yields will remain high for longer. Higher bond yields can keep borrowing costs high for consumers, businesses, and the government.
However, long-term US yields continued to decline for the third straight session, with the 10-year and 30-year US Treasury yields standing at 4.48% and 5.0%, respectively, at the time of writing. Lower yields could drive investors into precious metals, including Silver, seeking better returns amid reduced opportunity costs.
A weaker US Dollar (USD) could also support demand for Silver as the dollar-denominated metal becomes cheaper for foreign buyers. Investors are likely to await the release of the latest FOMC Minutes on Wednesday, followed by the PCE inflation data on Friday, for fresh impetus on the Federal Reserve’s (Fed) interest rate outlook.
Source: FXStreet
