XAG/USD holds gains near $33.00 due to increased safe-haven appeal

• Silver price receives support from global uncertainties following fresh tariffs from US President Donald Trump.
• The latest FOMC Meeting Minutes emphasized needing more time to assess multiple factors before considering any rate adjustments.
• The grey metal found support from strong industrial demand driven by electrification and manufacturing.

Silver (XAG/USD) rebounds from recent losses recorded in the previous session, trading around $32.80 per troy ounce during Asian hours on Thursday. The grey metal gains momentum due to its safe-haven appeal remains strong amid global uncertainties. US President Donald Trump recently proposed a 25% tariff on automobiles, along with duties on semiconductors and pharmaceuticals.

However, the non-interest-bearing Silver faced little downward pressure as investors digest the latest Federal Open Market Committee (FOMC) Meeting Minutes, released on Wednesday, which reaffirmed the decision to keep interest rates unchanged in January.

Fed policymakers stressed the importance of further assessing economic activity, labor market trends, and inflation before considering any rate adjustments. They agreed that clear evidence of declining inflation is essential before implementing rate cuts. Some officials also expressed concerns that potential changes in trade and immigration policies could hinder the disinflation process. Additionally, certain inflation expectation measures have risen in recent months.

Markets are currently pricing in one rate cut for the federal funds rate in 2025, with the possibility of a second. Federal Reserve Vice Chairman Philip Jefferson stated late Wednesday that the US central bank has time to deliberate on its next interest rate move, citing a resilient economy and inflation still above target. Meanwhile, Chicago Fed President Austan Goolsbee noted that while inflation has declined, it remains elevated, emphasizing that interest rates could be lowered further once inflation reaches a more acceptable level, according to Reuters.

The precious metal gained support from strong industrial demand from electrification and manufacturing. China’s addition of 357 gigawatts of solar and wind power in 2024 further underscored Silver’s critical role in renewable energy. Additionally, the People’s Bank of China (PBOC) opted to keep its Loan Prime Rates (LPRs) unchanged, with the one-year and five-year rates remaining at 3.10% and 3.60%, respectively, signaling a cautious approach to monetary stimulus.