• Silver continues to gain ground, supported by a weakening US Dollar.
  • Heightened US-China trade tensions are driving safe-haven demand for Silver.
  • Softer US inflation data has increased expectations for potential Fed rate cuts beginning in June.

Silver (XAG/USD) continues its winning streak for the third straight session, trading around $31.30 during Friday’s Asian session. The precious metal is gaining traction as the US Dollar weakens, with the US Dollar Index (DXY) dipping to around 100.20 at the time of writing.

Investor demand for safe-haven assets like Silver is also being fueled by escalating US-China trade tensions. On Thursday, the US announced a sharp increase in tariffs on Chinese imports—raising them to 145% with a new 125% levy on top of an existing 20% duty. This move overshadowed US President Donald Trump’s 90-day pause on higher tariffs for other countries, intensifying concerns over potential economic fallout from the US-China standoff.

Adding to Silver’s appeal, US inflation data came in softer than expected. March’s Consumer Price Index (CPI) showed headline inflation falling to 2.4% year-over-year—below the expected 2.6% and down from 2.8% in February. Core CPI, excluding food and energy, rose just 2.8%, also below estimates. On a monthly basis, headline CPI declined 0.1%, while core CPI inched up 0.1%. This has led markets to price in potential Fed rate cuts starting in June, with the possibility of a full percentage point reduction by year-end.

Meanwhile, the latest Federal Open Market Committee (FOMC) minutes suggested broad concern among policymakers over the challenge of balancing inflation risks with slowing economic growth. Dallas Fed President Lorie Logan warned that unexpected trade measures could spur job losses and inflation, potentially forcing the Fed into a defensive stance. Weekly jobless claims also ticked up slightly to 223,000.

Silver FAQs

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

Source: Fxstreet