Silver Falls on Fed Rate Hold Bets

Silver surged over 4% to trade above $92 per ounce on Friday, hitting nearly two-month highs as investors rotated into precious metals amid intensifying trade and geopolitical risks. The white metal is benefiting from a massive "debasement trade" triggered by the US administration's move to invoke Section 122 for a 10% global tariff, with markets pricing in a potential escalation to 15% following the recent Supreme Court ruling. This protectionist shift has overshadowed a "hot" January core PPI print of 0.8%, which reinforced a resilient Dollar and pushed the first fully priced Fed rate cut to July. Despite these hawkish headwinds, silver's rally is being supercharged by a flight to safety as US 10-year Treasury yields fell below 4% and investors liquidated positions in AI-infrastructure equities. Geopolitical premiums also remained elevated following the US State Department authorizing the departure of non-emergency personnel from its embassy in Israel due to safety risks.

Silver climbed nearly 2% toward $90 per ounce on Friday, poised for a second consecutive weekly gain, supported by US tariff uncertainties and elevated geopolitical risks. Investors weighed policy uncertainty in Washington after the US Supreme Court struck down Donald Trump’s broad reciprocal tariffs last week. The administration then implemented a new 10% global tariff, which could rise to 15% for certain countries, fueling concerns that existing trade deals between the US and its partners might be undermined. Meanwhile, a hawkish shift among Federal Reserve officials could limit gains in precious metals, with robust US economic data supporting expectations for an extended rate hold. On the geopolitical front, the US and Iran agreed to continue nuclear negotiations next week, following progress during Thursday’s talks in Geneva.

Silver prices fell below $87 per ounce on Thursday, retreating from a three-week high of $91.3 touched on Wednesday, as easing geopolitical premiums and a firm interest rate outlook overshadowed persistent trade uncertainty. Negotiators in Geneva signaled potential progress in US Iran nuclear talks which reduced the immediate safe haven demand that supported prices on Wednesday. Demand for the metal was further capped by a resilient US dollar as January PCE inflation stayed sticky at 3% reinforcing expectations that the Fed will keep interest rates steady. On the supply side regional selling pressure intensified as traders locked in profits following a 3% weekly gain while waiting for clarity on the administration plan to raise global tariffs from 10% to 15% under Section 122. This trade pivot followed a February 20 Supreme Court ruling that invalidated previous emergency duties.