Silver prices fell to around $32.50 per ounce on Thursday, easing from two-week highs as traders booked profits following a strong rally in precious metals.
Silver pulls back as traders lock in gains
The pullback in silver came after a significant surge in recent sessions, during which both silver and gold saw notable gains amid rising uncertainty in global trade and economic conditions. Gold, in particular, reached new all-time highs, fueled by increasing safe-haven demand as investors sought refuge from the escalating geopolitical and economic risks.
In recent days, global trade uncertainties have intensified, especially following President Trump’s latest moves. This week, Trump ordered a formal probe into potential new tariffs on critical mineral imports, as well as key industries like semiconductors and pharmaceuticals, further exacerbating fears of a protracted trade war. The threat of higher tariffs has spurred concerns about supply chain disruptions and rising input costs for various industries, contributing to the uptick in demand for precious metals as a hedge against inflation and instability.
Trade policies update
Meanwhile, China has expressed a conditional openness to renewed trade talks, although it has set specific preconditions for engagement. Chinese officials have called for greater respect in negotiations, a consistent policy approach from the US, and the appointment of a designated US negotiator with full backing from President Trump. These calls underscore the complexities of the trade dispute and highlight the difficulties in achieving a resolution that satisfies both parties, further weighing on investor sentiment.
On the domestic front, Fed Chair Jerome Powell’s remarks added to the market’s cautious tone. Powell warned that tariffs could stoke inflationary pressures and dampen overall economic growth, making it more difficult for the Federal Reserve to fulfill its dual mandate of price stability and maximum employment. He emphasized that the central bank is in no rush to cut interest rates, signaling that the Fed will need more data on economic conditions before making any adjustments to monetary policy. Powell’s cautious stance on rate cuts suggests that the Fed is taking a wait-and-see approach, carefully monitoring the impact of trade tensions on inflation and growth before making any significant moves.
Heightened volatility in precious metals markets
The combination of these factors has led to heightened volatility in precious metals markets, with silver and gold benefiting from increased risk aversion but facing intermittent profit-taking as traders weigh the evolving economic landscape. Going forward, market participants will likely remain focused on developments in the trade dispute, as well as any signals from central banks about their policy direction, as key drivers for the precious metals market.
