“The strong dollar environment makes it difficult for silver to regain ground, especially as US Treasury yields remain high,” said one market analyst. Higher yields make safe havens such as silver less attractive, putting pressure on the price of the metal.
The slowdown in the solar energy sector is further dampening demand
An additional factor in silver’s recent dip is a slowdown in demand from the solar industry, a crucial sector for silver consumption. Seasonal changes as winter approaches typically reduce solar installations, impacting the demand for silver in solar technology.
Many countries that import solar products have also cut back on spending, further impacting the price of silver. With global demand for silver falling, traders are taking a cautious approach ahead of the release of key US economic data this week.
Inflation, Producer Price Index (PPI) and retail sales are expected, with potential impacts on the strength of the dollar and, as a result, silver prices.
Market awaits insights from Fed amid rising trade tensions
As traders focus on Fed commentary, especially from Chairman Jerome Powell, any hints about future rate cuts could impact the outlook for silver. While the Federal Reserve recently cut rates by 25 basis points, officials are maintaining a wait-and-see approach, requiring more concrete signs that inflation is approaching the 2% target before making further adjustments.
Trump’s trade policies could potentially complicate the outlook for silver and escalate global tensions, causing investors to return to safe haven assets like silver. While the strong dollar and high government bond yields are currently weighing on silver prices, increased geopolitical risks could lead to renewed interest in the metal as a stable investment.