Silver price (XAG/USD) retraces its recent losses, hovering around $31.90 per troy ounce during Wednesday's Asian session. Safe-haven demand for the precious metal rises amid growing risk aversion following new US tariffs and escalating geopolitical tensions in the Middle East.
On Monday, US President Donald Trump implemented a flat 25% tariff on steel and aluminum imports, eliminating all exemptions and nullifying previous trade agreements with key US allies. The move aims to bolster struggling domestic industries but raises the risk of a broader trade conflict.
Geopolitical tensions in the Middle East could further support the Silver price. Israeli Prime Minister Benjamin Netanyahu warned late Tuesday that the ceasefire would end, and Israel would resume "intense fighting" in Gaza if Hamas does not release hostages by Saturday noon, according to the BBC. Earlier, President Trump urged Israel to break the ceasefire if hostages were not returned by the weekend.
However, demand for non-interest-bearing Silver could face headwinds, as higher US interest rates may persist. In his semi-annual report to Congress, Federal Reserve Chair Jerome Powell stated that officials "do not need to be in a hurry" to cut rates, citing a strong job market and solid economic growth. Powell also noted that President Trump's tariff policies could exert additional upward pressure on prices, making it more challenging for the Fed to ease monetary policy.
Investors now await the release of the US Consumer Price Index (CPI) inflation data on Wednesday, which could shape expectations for the Fed's monetary policy. Headline CPI inflation is projected to remain steady at 2.9% year-over-year, while core CPI inflation is expected to ease slightly to 3.1% from the previous 3.2%.
Silver price gains ground due to safe-haven demand following new Trump's tariffs.
Israeli PM Netanyahu warned to end the ceasefire if Hamas does not release hostages by Saturday noon.
The non-yielding Silver could struggle as Fed's Powell signaled there is no urgency to cut interest rates.(Cay)
Source: Fxstreet
