The U.S. dollar index dropped 3.40% to a four-month low, making silver more attractive to international buyers. Meanwhile, China’s central bank continued its gold purchases for a fourth straight month, indirectly supporting silver, which often follows gold’s lead in the monetary metals space.
Trade policy remains a wildcard. President Trump’s shifting stance on tariffs for Mexico, Canada, and China is keeping markets uneasy, with potential economic disruptions affecting silver’s industrial demand outlook. Additionally, Germany’s unexpected fiscal stimulus plans rattled European bond markets, adding to global economic uncertainty.
CPI Report to Drive Silver’s Next Move
The key market event this week is Wednesday’s U.S. Consumer Price Index (CPI) report, expected to show a 0.3% increase in February after January’s 0.5% gain—the biggest monthly rise since August 2023.
If inflation remains elevated, it could force the Fed to delay rate cuts, potentially limiting silver’s upside. On the other hand, a softer CPI print would strengthen expectations of monetary easing, creating a more favorable backdrop for silver. Markets currently expect 70 basis points of Fed rate cuts this year, but those expectations could shift depending on the inflation data.
Market Outlook: Fed Policy and Inflation Take Center Stage
Silver’s near-term direction will largely depend on inflation trends, interest rate expectations, and global economic conditions. If inflation remains stubbornly high, the Fed may be forced to keep rates steady longer than markets anticipate, which could weigh on silver. However, further signs of economic slowing—especially in jobs data—could boost expectations for rate cuts, supporting silver’s appeal as a hedge against monetary easing.
