Silver (XAG/USD) continues its positive momentum for the fifth consecutive session, trading around $32.30 per troy ounce during Friday’s early Asian hours. The precious metal remains near its three-month high of $32.56, recorded on February 5, as traders await critical US labor market data, particularly the Nonfarm Payrolls (NFP) report, which could influence the Federal Reserve’s (Fed) monetary policy decisions.
However, Silver’s upside appears limited as the US Dollar (USD) extends its recovery, buoyed by rising US Treasury yields. The US Dollar Index (DXY), tracking the USD against six major currencies, has climbed near 107.70, while the 2-year and 10-year US Treasury yields stand at 4.22% and 4.43%, respectively.
Silver, often seen as a safe-haven asset, has benefitted from risk aversion amidst global trade and economic uncertainties. Still, market sentiment may be tempered by the upcoming US-China trade talks. US President Donald Trump and Chinese President Xi Jinping are set to discuss potential tariff rollbacks, which could ease tensions and limit Silver’s price growth.
Furthermore, reduced fears of a US-China trade war are diminishing concerns about rising US inflation, supporting expectations of two Federal Reserve rate cuts in 2025. As a non-yielding asset, Silver tends to perform well under a dovish central bank stance.
Elsewhere, the Reserve Bank of India (RBI) is expected to announce a 25-basis-point rate cut on Friday. The European Central Bank (ECB) recently reduced its Deposit Facility Rate by 25 basis points to 2.75%, while the People’s Bank of China (PBoC) has signaled potential rate cuts. The Bank of Canada (BoC) has also paused its quantitative tightening, and Sweden’s Riksbank has lowered interest rates.
