Silver holds near seven-month highs on safe-haven demand

Silver prices hovered around $34.50 per ounce on Thursday, holding close to their highest levels in seven months, as investors flocked to safe-haven assets amid growing concerns about the U.S. economic outlook.

Silver holds near seven-month highs on safe-haven demand

The metal, which often benefits during times of uncertainty due to its dual role as both an industrial and a monetary asset, found strong support after a series of disappointing macroeconomic indicators deepened fears of a potential slowdown in the world's largest economy. A key catalyst was Wednesday’s ADP employment report, which revealed that the U.S. private sector added only 37,000 jobs in May—well below market forecasts and the weakest pace of hiring in over two years. This marked a significant deterioration in labor market momentum and suggested that employers are growing increasingly cautious in response to softening demand and elevated costs. The weak jobs print followed a similarly downbeat ISM services PMI, which signaled contraction for the first time in nearly a year. The index showed sharp declines in new business activity and a surge in input costs, potentially exacerbated by recently imposed tariffs on a broad range of imported goods. These data points intensified speculation that the Federal Reserve may soon be forced to pivot toward a more dovish stance, despite its current wait-and-see approach. President Donald Trump has renewed his criticism of the Fed, urging policymakers to deliver interest rate cuts to stimulate growth. However, Fed officials have remained cautious, highlighting the need for clearer signals from inflation data and broader economic indicators before committing to further monetary easing.

Geopolitical tensions added another layer of uncertainty

Geopolitical tensions added another layer of uncertainty, further supporting silver’s upward trajectory. Trump reignited trade fears by stating it would be “extremely hard” to reach a comprehensive deal with Chinese President Xi Jinping, casting doubt on previously reported plans for high-level dialogue. Markets, which had been hoping for a de-escalation in U.S.-China tensions, responded with renewed risk aversion. Meanwhile, silver’s rise was amplified by a weaker U.S. dollar, which fell on the back of the poor data, making dollar-denominated assets like silver more attractive to foreign buyers. Additionally, with gold also advancing, silver benefited from increased interest in precious metals as part of a broader defensive strategy among investors. The gold-to-silver ratio narrowed slightly, suggesting stronger relative momentum for silver, which also sees demand from industrial applications such as electronics and solar panels—sectors still expected to grow despite broader economic headwinds. Looking ahead, traders will be closely monitoring Friday’s U.S. nonfarm payrolls report for further clues on labor market health, along with upcoming Fed commentary and global geopolitical developments. Until then, silver is likely to remain well-supported, with any signs of further economic deterioration or escalation in trade tensions likely to reinforce its safe-haven appeal.