Silver Price Falls to $39.00 as US Dollar Strengthens, Fed Holds Steady

Silver Price Falls to $39.00 as US Dollar Gains Strength and Risk Appetite Rises

The Silver price (XAG/USD) edged lower to around $39.00 during the early European session on Friday, driven by a stronger US Dollar and improved risk sentiment amid easing trade tensions. This marks a continuation of the metal’s downward pressure as demand for safe-haven assets weakens.

US-China Trade Optimism Dents Silver’s Appeal

Investor concerns over prolonged US-China trade tensions have eased following a Wall Street Journal (WSJ) report suggesting President Donald Trump is shifting toward a more negotiation-based strategy. The change in tone is aimed at securing better US access to Chinese markets, particularly in technology and business sectors.

The possibility of a trade breakthrough, combined with positive sentiment surrounding US-EU trade talks, has reduced the market's demand for non-yielding safe-haven metals like silver.

Related Read: How Trade Agreements Impact Precious Metals

Fed Rate Decision in Focus as Dollar Firms

The US Dollar (USD) remains broadly stronger as markets price out immediate Federal Reserve rate cuts for July. Traders now anticipate fewer than two cuts this year after six consecutive weeks of falling jobless claims.

The Fed is expected to hold interest rates steady at next week’s meeting, with a potential rate cut in September or later in the year. A hawkish pause by the central bank supports the USD, making USD-denominated commodities like silver more expensive for global buyers, thereby pressuring prices lower.

Risk Appetite Gains, Weighing on Safe-Havens

Reports from the Financial Times also boosted sentiment after confirming that the EU is finalizing a trade agreement with the US, similar to its pact with Tokyo. The improved risk appetite in global markets is a bearish factor for silver, which typically benefits in times of economic uncertainty.