On Friday, Silver (XAG/USD) is trading near $89.70, marking a 2.50% daily decline and continuing the correction from its recent record highs. The metal is facing pressure as the market environment shifts toward favoring riskier assets, dampening its appeal as a safe haven.
This drop in Silver prices is largely caused by easing geopolitical tensions. US President Donald Trump indicated he has stepped back from potential military action after receiving guarantees that killings would cease. These remarks have calmed fears of regional conflict escalation and encouraged investors to move capital toward risk assets, negatively affecting precious metals.
Market sentiment also improved after Trump stated he does not plan to remove Fed Chair Jerome Powell. This stance eases concerns regarding central bank independence, a factor that had previously boosted safe-haven buying. Additionally, the absence of new immediate tariffs is helping to alleviate trade tensions.
From a macroeconomic perspective, Silver remains squeezed by expectations for prolonged higher US interest rates. Recent strong employment data confirms the resilience of the US labor market, reinforcing the view that the Federal Reserve could keep monetary policy restrictive for several more months. In this environment, non-yielding assets like Silver become less attractive compared to elevated Bond yields.
Although this pullback reflects profit-taking and a temporary shift in sentiment, investors are still closely monitoring geopolitical developments and upcoming Federal Reserve statements, which could reignite volatility in the precious metals market.
