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Despite soft data, Fed Chair Jerome Powell remains cautious, signaling no immediate need for policy changes. San Francisco Fed President Mary Daly echoed this view, stating that while uncertainty is rising, the economy does not yet justify aggressive monetary easing.
Silver Holds Near $32.10 as Traders Eye Fed Policy
Silver (XAG/USD) is trading near $32, after reaching an intraday high of $32.21, supported by Fed rate cut expectations and a weaker U.S. dollar. However, concerns about slowing global demand, particularly from China, have capped gains.
Traders are now pricing in a 75 basis point rate cut by the Fed in 2025, with a June cut fully anticipated, according to LSEG data. Lower rates typically support silver, making it more attractive as a non-yielding asset. However, demand concerns from major economies could limit upside potential.
China’s Consumer Price Index (CPI) fell 0.7% year-over-year in February, marking the first deflationary trend since January 2024. This signals weak consumer spending in the world’s second-largest economy, potentially dampening demand for industrial metals like silver.
Trade Tensions and Economic Slowdown Add to Market Volatility
The U.S. announced 25% tariffs on steel and aluminum imports, set to take effect on Wednesday, despite strong opposition from domestic businesses. In retaliation, China imposed a 100% tariff on Canadian rapeseed oil, a 25% levy on pork and seafood, and additional tariffs on key agricultural products.
With rising global trade tensions and China’s slowing economy, gold’s safe-haven appeal remains intact. However, weaker Chinese demand for precious metals could limit upside momentum.
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