Silver prices surged nearly 2% to above $33 per ounce on Tuesday, rebounding from losses in the previous session as initial enthusiasm over the recently announced US-China trade agreement began to wane, giving way to broader market caution.
Silver rebounds as trade optimism cools
The rally in the precious metal was fueled in part by a return to safe-haven demand, as investors reassessed the global economic outlook and the sustainability of the fragile trade truce.
The latest boost in prices followed weekend negotiations in Switzerland, where Washington and Beijing agreed to lower their respective tariffs to 10% and 30% for a 90-day period. This move marked a significant, albeit temporary, de-escalation in the prolonged trade tensions between the world's two largest economies. While the agreement eased immediate fears of an escalation that could have severely disrupted global trade flows, market participants remained skeptical about the prospects for a comprehensive, lasting resolution. Officials from both sides are expected to reconvene for further talks in the coming weeks, but considerable uncertainty lingers over what will happen once the 90-day window expires, keeping investors on edge.
Industrial demand outlook improves
In addition to its safe-haven appeal, silver also benefited from improved sentiment toward its industrial demand outlook. The trade truce bolstered hopes that key sectors such as electronics, automotive, and renewable energy—where silver is extensively used—could experience more stable demand conditions. The agreement is seen as particularly supportive for the solar energy industry, where both the US and China are global leaders in production and installation. Any easing in trade frictions is expected to benefit cross-border investments and supply chains, further underlining silver's dual role as both a precious and industrial metal.
Meanwhile, investor attention has turned to the imminent release of the latest US consumer inflation data, which could have a significant bearing on expectations for the Federal Reserve’s next steps on monetary policy. A stronger-than-expected inflation reading could dampen the rally in precious metals by reinforcing bets that the Fed may delay or limit further interest rate cuts. Conversely, weaker inflation data might add to concerns over a slowing US economy, boosting demand for safe-haven assets like silver and gold.
Overall, silver remains highly sensitive to shifts in global economic sentiment, trade policy developments, and signals from major central banks regarding the future path of interest rates, keeping the metal in focus for both investors and industrial users in the weeks ahead.
