The escalating tariff measures strengthened the US Dollar, making gold less attractive for international investors. A stronger dollar increases the cost of gold for buyers using other currencies, contributing to the recent selling pressure.

Silver Faces Headwinds as Dollar Strengthens

Silver (XAG/USD) also struggled, trading at $31.23, weighed down by a robust US Dollar and trade policy concerns. The dollar’s strength is supported by positive US economic data and a hawkish stance from the Federal Reserve.

US economic growth remained steady at 2.3% in Q4 2024, meeting expectations and boosting investor confidence in the dollar. The US Dollar Index (DXY) held firm above 107.00, maintaining pressure on silver as a non-yielding asset.

Adding to silver’s woes, US-China trade tensions continued to escalate, with the US increasing tariffs on Chinese goods to 20%. Despite China’s liquidity measures, including a CNY300 billion injection via the Medium-term Lending Facility (MLF), silver prices remained under pressure.

The bearish sentiment for both gold and silver was further amplified by comments from Federal Reserve Bank of Atlanta President Raphael Bostic, who emphasized the need to maintain high interest rates to control inflation.

This hawkish outlook reduced expectations of near-term rate cuts, limiting the appeal of non-yielding assets like gold and silver.