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Dollar Sentiment Deteriorates as Investors Pull Back
The dollar’s sharp drop played a central role in silver’s rally. The U.S. dollar index registered its worst weekly performance since April, falling 1.35%. Market skepticism toward U.S. fiscal credibility is building: net short positions on the dollar surged to $17.3 billion, and international investors are reportedly reducing exposure to U.S. assets. The dollar’s decline, despite higher Treasury yields, indicates growing unease about the long-term appeal of U.S. financial instruments—a clear tailwind for precious metals.
Treasury Yields Flash Warning Signals for Policy Risk
Bond markets are reflecting the strain. The 30-year yield hit 5.14%, while the 10-year climbed to 4.62%, the highest since late 2023. Investors are demanding higher compensation to hold long-dated Treasuries, concerned that the federal debt may eventually require monetization by the Federal Reserve. Bridgewater’s Ray Dalio warned that the bigger risk is not default, but inflation—should the Fed be forced to finance deficits through asset purchases. That backdrop continues to support silver’s role as a hedge against currency and fiscal deterioration.
Trade Policy Adds a Layer of Safe-Haven Demand
President Trump’s revived tariff threats—particularly targeting EU imports and Apple products—introduced a fresh source of geopolitical tension. These proposals, set to begin in June, rattled equity markets and reinforced safe-haven demand. Silver, while historically more industrial than gold, is drawing strength from the broader risk-off bid ignited by rising trade conflict.
Silver Outlook: Fundamentals Signal Continued Strength
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