HG MARKETS:

Silver (XAG/USD) paused its recent four-day rally, trading around $32.80 per troy ounce during European hours on Wednesday. The precious metal’s appeal as a safe-haven asset has diminished due to easing global trade tensions. Investors are showing reduced demand for safe-haven assets like silver as optimism grows around geopolitical developments, particularly between the US and China.

Reports suggest that the United States and China have reached a preliminary understanding to significantly lower tariffs. Under the tentative agreement, the US plans to cut tariffs on Chinese goods from 145% to 30%, while China would reduce tariffs on US imports from 125% to 10%. This move is seen as a major step toward defusing long-standing trade frictions between the two nations, which has boosted investor confidence and lifted overall market sentiment.

US President Donald Trump added to the positive tone by stating in a Fox News interview that US-China relations are “excellent” and noted ongoing efforts to increase American access to Chinese markets. He also expressed openness to direct talks with Chinese President Xi Jinping to pursue a more comprehensive trade deal. As geopolitical tensions ease, market participants are dialing back their expectations for aggressive interest rate cuts by the Federal Reserve, further dampening demand for silver as a protective hedge.

Despite this, silver found some support from weaker-than-expected US inflation data for April. The US Consumer Price Index (CPI) rose 2.3% year-over-year, slightly below March’s 2.4% and consensus estimates, while the core CPI rose 2.8% annually, matching expectations. Both headline and core inflation increased 0.2% on a monthly basis. The softer inflation print weighed on the US Dollar, making silver more attractive to non-dollar investors. However, analysts believe this could be the last subdued inflation reading for a while, with new US tariffs on the horizon. Market attention now turns to upcoming data, including the US Producer Price Index (PPI) and the University of Michigan’s Consumer Sentiment Survey.