However, expectations that Trump’s trade policies could boost inflation and push the Fed to take a hawkish stance have buoyed the US dollar (USD), which recovered from a two-week low. Moreover, positive sentiment in the stock markets has put a damper on gold’s gains as risk appetite among investors remains.
Silver prices are rising due to industrial demand and market volatility
Silver (XAG/USD) is currently trading at $30.62, after hitting an intraday high of $30.74, as investors turn to the metal for both its safe-haven qualities and industrial applications. Expectations of Fed rate cuts, coupled with falling bond yields, have supported silver’s rally.
Beyond geopolitical concerns, silver is benefiting from robust industrial demand, especially from sectors such as renewable energy and technology, where the metal plays a crucial role in solar panels and electronics. These dual demand dynamics position silver favorably in a volatile economic environment.
On the US economic front, the dollar’s recovery is being driven by concerns that tariffs on Canada and Mexico, set at 25%, could drive up inflation. A stronger dollar tends to weigh on gold and silver prices, as they become more expensive for foreign investors.
Recent economic data, including the Producer Price Index (PPI) and the Consumer Price Index (CPI), indicate that inflation may be cooling, raising the likelihood of Fed rate cuts later this year. This could further support gold prices in the long term by reducing the attractiveness of yield-bearing assets.
Looking ahead, investors will be closely watching key events such as the Bank of Japan policy meeting and the release of global PMI data, which could cause further volatility in precious metals markets.