Silver (XAG/USD) fell for a second day on Monday, trading around $32.30 per troy ounce in Asian markets. The metal has faced downward pressure recently. Yet growing concerns about the U.S. economic outlook and fiscal health may limit deeper losses.
Moody’s Downgrade Eases Dollar, Buoys Metals
Late last week, Moody’s cut the U.S. credit rating from Aaa to Aa1, citing soaring debt and higher interest burdens. The agency now projects federal debt at 134% of GDP by 2035, up from 98% in 2023. This downgrade weighed on the dollar index, helping to underpin precious metals.
Trade Optimism Weighs on Silver
At the same time, easing global trade tensions lifted risk appetite. A preliminary U.S.-China deal would cut U.S. tariffs on Chinese goods from 145% to 30% and Chinese tariffs on U.S. imports from 125% to 10%. Hopes for a U.S.-Iran nuclear agreement and planned talks between Presidents Trump and Putin on Ukraine further boosted confidence. These developments pressured non-yielding assets like silver.
Fed Rate Cut Expectations May Support Silver
However, weak U.S. economic data has revived bets on Federal Reserve rate cuts later this year. The University of Michigan’s consumer sentiment index plunged to 50.8 in May, its lowest since June 2022 and below the 53.4 forecast. If the Fed eases policy, silver could regain upside momentum as investors seek alternatives to cash.
Market watchers will focus on upcoming U.S. data and central bank comments. A weaker dollar and lower real yields would likely sustain silver’s safe-haven appeal.
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