Silver traded around $30 per ounce on Monday, remaining volatile as investors continued to assess the impact of U.S. President Donald Trump’s escalating trade war on the global economy. The precious metal lost as much as 16% in just three sessions, reflecting the heightened uncertainty caused by tariff-induced recession concerns.
Silver remains volatile amid economic uncertainty
The market selloff, spurred by fears of a global economic slowdown, prompted traders to liquidate positions in precious metals to cover losses in other assets, including equities and high-risk bonds. Silver, often seen as a safe haven in times of economic turbulence, was not immune to the broader market panic, as its role as a store of value was overshadowed by the immediate need for liquidity.
The volatility in silver prices intensified after the White House announced sweeping tariffs on all countries last week, setting the stage for retaliatory measures. In response, China unveiled its own levies on U.S. goods, escalating the already fraught trade tensions between the two largest economies in the world. This development sparked concerns about a full-blown trade war, with other major economies potentially following suit and imposing their own tariffs on U.S. exports. The cascading effect of these tariffs could disrupt global supply chains, curtail industrial output, and dampen investor sentiment, contributing to the selloff in global markets.
Silver and other precious metals may receive renewed support
However, despite the broader market slump, silver and other precious metals may receive renewed support as traders increasingly bet on further rate cuts by the Federal Reserve. As the U.S. economy faces the headwinds of a trade war, rising inflationary pressures, and potential job losses, market participants are pricing in a higher likelihood of monetary easing. Lower interest rates generally increase the appeal of non-yielding assets like silver, as they make it more attractive relative to interest-bearing assets such as bonds. Furthermore, precious metals like silver tend to benefit in periods of economic uncertainty, as they are viewed as hedges against both inflation and market volatility.
Potential outlook
While silver is still reeling from the short-term impact of the global selloff, its longer-term prospects could brighten if economic conditions continue to deteriorate or if global central banks respond with aggressive monetary policies to stave off a recession. Investors may also turn to silver as a hedge against currency devaluation, especially as the value of the U.S. dollar fluctuates in response to changing trade dynamics. The continued uncertainty in the markets could lead to further volatility in silver prices, but the metal’s role as a store of value in times of crisis may help cushion it against broader economic turmoil.
