Silver (XAG/USD) extended its losses by over 1% on Monday, pressured by improving market sentiment and a modest recovery in the U.S. Dollar. Investor appetite for riskier assets strengthened following a de-escalation in U.S.-EU trade tensions, reducing demand for traditional safe havens like precious metals.
The shift in tone came after U.S. President Donald Trump announced a delay in plans to impose a sweeping 50% tariff on all Eurozone imports starting June 1. The decision followed a phone call with European Commission President Ursula von der Leyen and eased fears of an imminent trade confrontation, which had been weighing on global growth expectations.
However, the U.S. Dollar’s rebound may be short-lived as fiscal concerns continue to weigh on investor confidence. The recent downgrade of U.S. debt ratings, coupled with the potential fallout from Trump’s proposed tax overhaul, has raised alarm bells about long-term fiscal sustainability. These developments have spurred a wave of “Sell America” sentiment in financial markets.
The proposed “big, beautiful tax bill,” which is expected to be debated in the Senate in the coming weeks, could add an estimated $3.8 trillion to the current $36.2 trillion national debt over the coming years, according to analysts. Mounting fiscal pressure is likely to limit the greenback’s upside and could, in turn, cushion the downside for Silver.
As markets digest the latest geopolitical and economic shifts, traders are likely to remain cautious, weighing the improving trade outlook against deepening concerns over U.S. fiscal stability.
