U.S. Treasury yields rose to their highest level in two weeks, signaling market expectations for inflationary pressure from fiscal policy. Despite gold's appeal as a hedge, its performance remains under pressure from rising bond yields and the dollar's recent monthly high.
Silver outperforms gold due to demand for safe haven
Silver (XAG/USD) is gaining momentum and is trading at $32.13 after hitting an intraday high of $32.19. Unlike gold, silver benefits from its dual role as a safe-haven asset and industrial metal, especially amid inflation concerns and geopolitical tensions.
The metal's affordability and industrial demand attract buyers and protect it from broader downward pressures affecting gold.
Expected rate cuts from central banks are also boosting silver, as lower interest rates generally make precious metals more attractive. Silver’s resilience highlights its growing role in an uncertain economic environment.
Geopolitical risks and major upcoming events
Continued geopolitical tensions, including conflicts in Eastern Europe and the Middle East, provide a safety net for precious metals. Traders are now focusing on upcoming U.S. economic indicators such as the producer price index and weekly unemployment claims that could influence near-term market sentiment.
Next week's Federal Open Market Committee (FOMC) meeting will be critical to the trajectory of gold and silver.
