Silver Prices Continue to Rise Amid Economic and Tariff Developments
New Delhi (The Uttam Hindu): Silver prices have been steadily increasing, marking its fourth consecutive day of gains, with spot prices fluctuating between $32.26 and $32.77 on March 6, 2025. The metal was valued at $32.75, reflecting a daily gain of approximately 0.29%. The MCX May Silver contract also saw an increase of 0.74%, settling at Rs 98,260.
In tariff-related news, US President Donald Trump has exempted Mexico from the 25% tariffs on goods covered under the North American Trade Agreement (USMCA) until April 2. This follows an earlier exemption granted to Canadian auto parts. However, it's still unclear if Canada will receive a complete USMCA tariff exemption. Currently, the US tariff stands at its highest level since 1940.
On the European front, the European Central Bank (ECB) reduced key interest rates for the sixth time since June 2024, cutting the deposit rate by 25 basis points to 2.50%. ECB officials indicated that their monetary policy is now less restrictive and forecast that Eurozone inflation will reach their 2% target by early 2026. The Euro strengthened nearly 5% in the past five sessions, aided by Germany's plan to ramp up borrowing.
The upcoming Emergency EU Leaders’ Summit in Brussels is expected to focus on defense budgets for Ukraine, especially after the US scaled back its security commitments in Europe. Meanwhile, US Federal Reserve Chair Jerome Powell is scheduled to address the economic outlook during the Chicago Booth 2025 Monetary Policy Forum.
Recent economic data showed mixed results, with the ADP employment change for January coming in at 77,000, much lower than the expected 140,000. However, the ISM services report exceeded predictions. The final Q4 US nonfarm productivity reading came in at 1.5%, above the forecast, while unit labor costs increased by 2.2%, falling short of the 3% estimate.
Concerns about US economic growth have surfaced, with Bloomberg suggesting that Trump's trade policies could cut US GDP by 1.3%. Consumer spending dropped in January, and manufacturing prices surged to levels not seen since June 2022.
The US Dollar Index fell to 103.76, its lowest point since November 2024, pressured by weak US economic data and rising yields in Europe. At the same time, German 10-year bond yields hit 2.93%, the highest since October 2023, due to a significant plan to boost defense and infrastructure spending.
Attention now turns to the February US nonfarm payrolls report, which may indicate a further slowdown in the job market.
In silver-specific news, Silver ETF holdings have dropped by 10 million ounces year-to-date, and COMEX silver inventories have surged to a record 416.81 million ounces due to delivery demand. The outlook for silver remains positive, supported by a weaker US dollar, global economic uncertainty, and fiscal stimulus measures in both China and Europe. Support levels for silver are expected around $32 (Rs 96,000), with resistance seen at $33.45 (Rs 100,000), unless the US nonfarm payroll report brings an unexpected shift.
Overall, silver's future looks promising, with both economic factors and technical indicators suggesting continued interest in the metal.
