Global Risk-On, Silver Under Pressure
Silver prices (XAG/USD) weakened again in the Asian session on Tuesday, hovering around $46.80 per troy ounce after dropping nearly 3.8% in the previous session. This marked the third consecutive day that silver has been under selling pressure. The primary cause: global markets are reverting to "risk-on" mode due to optimism about a US-China trade deal. When investors feel relations between the world's two largest economies will cool, the need to flee to safe-haven assets like silver decreases.
Senior US and Chinese officials said last weekend that they had developed a preliminary framework for an agreement, including on tariffs and export controls. US Treasury Secretary Scott Bessent said Trump's threat of 100% tariffs on Chinese goods was "practically off the table," and China agreed to suspend rare earth export controls for one year while reviewing its policies. This positive sentiment led the market to interpret the risk of trade escalation as declining, and the outlook for stable global demand, making investors more willing to take risks in stocks and cyclical commodities—rather than safe havens like silver.
However, there's a floor to prevent silver from falling too far. Market participants are almost certain the Federal Reserve will cut interest rates again by 25 basis points on Wednesday, which would lower the benchmark interest rate to the 3.75%–4.00% range. The market has already priced in the probability of this cut as almost certain, including the possibility of another cut in December. Lower interest rates are typically positive for precious metals like silver because silver doesn't pay interest—so the "opportunity cost" of holding silver is lower if dollar yields also fall.
But the picture isn't entirely clear. The US government shutdown has added to the threat to the Fed's policy. Internal debate within the Fed itself continues: should they cut interest rates quickly to protect the weakening labor market, or hold off for now because US inflation remains above the 2% target. For silver, this means this: short-term trade tensions are keeping prices down to the $46 area, but going forward, the Fed's tone will be key to whether silver can rebound or be dragged down further. (Asd)
Source: Newsmaker.id
