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Silver revisits $31 high as dollar extends downside

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Silver (XAGUSD) reclaimed a more-than-a-month high of $30.95 in Wednesday’s European session, with the white metal strengthening as the US Dollar extends its downside due to less-fearful tariff plans announced by President Donald Trump in his first two days of administration.

The DXY Dollar Index, which tracks the greenback’s value against six major currencies, refreshed a two-week low at 107.80. The lower US Dollar makes the Silver price inexpensive for investors, while the 10-year US Treasury yields tick lower to near 4.57%.

Trump announced 25% tariffs on Mexico and Canada and is discussing 10% tariffs on China from February 1. However, his comments during the election campaign indicated that the tariffs would be much higher than what he actually announced.

Lower tariffs would also weigh on market speculation that the Federal Reserve will keep interest rates at their current levels for longer.

Market participants were anticipating that higher tariffs would increase demand for domestically produced goods and services, a scenario that would have accelerated inflationary pressures.

Currently, the CME FedWatch tool shows that traders are confident that the Fed will keep its key borrowing rates in the range of 4.25%-4.50% in the coming three policy meetings.

XAGUSD chart by TradingView

(Source: OANDA)