Silver (XAG/USD) prices fell after rising more than 2% in the previous session, trading near $34.30 per troy ounce during Asian trading hours on Friday (3/28). Despite the decline, safe-haven demand for Silver remained strong amid rising risk aversion, driven by escalating trade tensions ahead of new US tariffs next week.
US President Donald Trump recently imposed a 25% tariff on foreign-made cars and auto parts, prompting threats of retaliation from the European Union and Canada. This has raised concerns about a wider trade dispute and potential global economic impact.
Silver, a non-yielding asset, could regain some ground as US Treasury yields decline. At the time of writing, the 2-year and 10-year yields were at 3.99% and 4.34%, respectively. However, Moody's has warned that higher tariffs and tax cuts could significantly widen the government deficit, potentially leading to a downgrade of the US debt rating and higher Treasury yields.
Meanwhile, US Gross Domestic Product (GDP) grew at an annualized rate of 2.4% in Q4 2024, beating estimates of 2.3%, data released on Thursday showed. Investors now turn their attention to Friday's US Personal Consumption Expenditures (PCE) Price Index for further insight into the Federal Reserve's (Fed) monetary policy stance. The Fed kept interest rates steady last week but reiterated expectations for two rate cuts by the end of the year.
Boston Fed President Susan Collins noted on Thursday that the central bank faces a difficult choice between maintaining a tight policy stance or acting early to address a potential economic downturn. Meanwhile, Richmond Fed President Thomas Barkin warned that uncertainty surrounding the Trump administration's trade policies could push the Fed toward a more cautious and wait-and-see approach than markets have anticipated. (Newsmaker23)
Source: FXstreet
