Silver (XAG/USD) rebounded on Thursday, recovering losses from the previous session and trading around $33.70 per troy ounce during Asian market hours. The precious metal found support as investors flocked to safe-haven assets following the announcement of new US auto tariffs, raising concerns about potential retaliatory actions.
The risk-off sentiment surged after US President Donald Trump signed an executive order on Wednesday imposing a 25% tariff on auto imports, set to take effect on April 2, with collections starting the following day. Auto parts imports were given a one-month grace period.
Silver, a non-yielding asset, saw increased demand as US Treasury yields declined, with the 2-year and 10-year yields stabilizing at 4.0% and 4.34%, respectively. Additionally, a weaker US Dollar (USD) made silver more affordable for international buyers, further bolstering demand for the metal.
In a related development, the Federal Reserve (Fed) reaffirmed its forecast for two rate cuts this year, but adopted a cautious approach amid inflation concerns. Minneapolis Fed President Neel Kashkari emphasized the continued challenges in addressing inflation, stating, “The job market has stayed strong, but the biggest challenge is to finish the job.” Kashkari echoed Fed Chair Jerome Powell’s stance that rate cuts are unlikely in the near term, while highlighting the policy uncertainties the central bank faces.
Market participants are also keeping a close watch on upcoming US economic data, including Thursday’s Initial Jobless Claims and the final Q4 GDP Annualized report. Additionally, Friday’s release of the Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge, is expected to provide further insights into potential monetary policy adjustments.
