Silver prices trimmed earlier losses to trade near $32.60 per ounce, recovering ground as a weaker-than-expected U.S. GDP report for Q1 2025 reignited recession concerns and boosted safe-haven demand amid persistent global trade tensions.
Silver cuts losses as US GDP data disappoints
The U.S. economy unexpectedly shrank by 0.3% in the first quarter — the first contraction in three years — sharply underperforming market expectations for a 0.3% expansion. The downturn was driven largely by a staggering 41.3% spike in imports, as businesses and consumers accelerated purchases ahead of anticipated tariff hikes from the Trump administration, which disrupted trade flows and widened the trade deficit.
Adding to the bearish economic narrative, the ADP National Employment Report revealed private payrolls increased by only 62,000 in April, significantly below the 115,000 projected and marking the weakest monthly gain since July 2024. The soft jobs data reinforced concerns about a slowing labor market, dampening investor sentiment and prompting increased speculation around a potential policy response from the Federal Reserve.
Globally, silver's industrial demand outlook was further clouded by disappointing economic data from China, where manufacturing activity contracted more than expected in April. The downturn, driven by weakening export orders and subdued domestic investment, suggested that the world's largest industrial consumer of silver may face further headwinds, compounding concerns over global demand.
Eyes on geopolitical front
On the geopolitical front, while both Washington and Beijing have signaled a tentative openness to easing tensions amid the mounting economic toll, formal negotiations remain elusive. The lack of clarity around trade policy continues to inject volatility into metals markets, where silver, with its dual role as both an industrial commodity and a monetary asset, remains especially sensitive to macroeconomic and geopolitical uncertainty.
Despite the mixed demand outlook, silver continues to benefit from investor hedging strategies, supported by falling real yields and expectations that any sustained economic weakness could push the Federal Reserve toward a more accommodative stance in the coming months. As a result, silver has outperformed many other industrial metals and remains near multi-year highs.
