Silver (XAG/USD) lost momentum in Asian trading on Tuesday, retreating to around $33.40 per troy ounce after two consecutive sessions of gains. The decline is driven by reduced safe-haven demand as easing trade tensions between the United States and the European Union bolster market risk appetite.
The softening of trade risks comes after U.S. President Donald Trump, who had threatened on Friday to impose a 50% tariff on EU imports, chose to extend the tariff deadline following a phone conversation with European Commission President Ursula von der Leyen on Sunday. In response, the EU agreed on Monday to accelerate negotiations with Washington in a bid to avert a potential transatlantic trade conflict.
Despite this, Silver may find renewed support amid intensifying concerns over U.S. fiscal stability. Trump’s proposed “One Big Beautiful Bill,” expected to hit the Senate floor for a vote, includes significant tax cuts, increased spending, and a raise to the debt ceiling. According to estimates from the Congressional Budget Office (CBO), the legislation could widen the federal deficit by $3.8 billion. These measures are likely to place additional strain on U.S. government finances and sustain elevated bond yields.
Persistently high yields tend to dampen demand for non-yielding assets like precious metals. However, U.S. long-term yields have been easing for the third straight session. At the time of writing, 10-year and 30-year Treasury yields stand at 4.48% and 5.0%, respectively. This pullback in yields could revive investor interest in safe-haven assets such as Silver, as the opportunity cost of holding them diminishes.
A weaker U.S. Dollar is also providing a cushion for Silver, making the dollar-denominated metal more affordable for foreign investors. Market participants are now turning their attention to key economic events later in the week, including Wednesday’s release of the Federal Open Market Committee (FOMC) minutes and Friday’s Personal Consumption Expenditures (PCE) inflation data. These events are likely to offer clearer insight into the Federal Reserve’s interest rate trajectory, potentially influencing Silver’s next move.
