Silver prices (XAG/USD) extended their bullish run for a second consecutive day, climbing to around $31.10 per troy ounce during Thursday’s Asian session. The grey metal surged nearly 4% in the previous session, buoyed by a spike in safe-haven demand amid escalating US-China trade tensions.
The rally followed US President Donald Trump’s abrupt announcement of a tariff hike on Chinese imports to 125%, a swift response to China’s decision to increase duties on US goods to 84%. This tit-for-tat escalation eclipsed the broader effort at trade de-escalation, which had included a temporary reduction in US tariffs to 10% for 90 days aimed at facilitating negotiations with other nations.
Fed’s Inflation Concerns and China’s Economic Data Shape Market Sentiment
Investors are also digesting the latest Federal Open Market Committee (FOMC) minutes, which revealed near-unanimous concern among policymakers about the risks of rising inflation and weakening economic growth. The minutes highlighted the “difficult tradeoffs” facing the Federal Reserve as it navigates a path between controlling inflation and supporting growth, reinforcing the Fed’s commitment to a data-dependent approach.
Meanwhile, fresh economic data out of China added further momentum to silver’s rise. China’s Consumer Price Index (CPI) fell by 0.1% year-over-year in March, missing expectations of a 0.1% increase and marking a continuation of February’s 0.7% decline. On a monthly basis, CPI dropped 0.4%, a steeper fall than February’s 0.2% dip. Simultaneously, China’s Producer Price Index (PPI) declined 2.5% year-over-year—exceeding both the previous month’s 2.2% drop and forecasts for a 2.3% decline. The data signals persistent deflationary pressure and reinforces dovish expectations for future policy moves by the People’s Bank of China (PBoC).
Silver, being a non-yielding asset, tends to benefit in low-interest or dovish policy environments, and the disappointing Chinese inflation figures have renewed bets on continued monetary easing in the world’s second-largest economy.
Outlook: US Data in Focus
Despite the escalating geopolitical tensions, Fed officials reiterated their cautious stance, underscoring that future rate decisions will hinge on incoming economic data. The CME FedWatch tool now indicates a 40% probability of a rate cut at the Fed’s next policy meeting.
Market participants are now awaiting the release of US CPI and PPI data on Friday, which could provide clearer guidance on the Fed’s next steps and shape the trajectory for both the US Dollar and precious metals like silver.
