Silver (XAG/USD) declined nearly 1% on Friday, trading around $48.30 during the Asian session, after posting gains in the previous session. The pullback in precious metals, including silver, was largely driven by renewed optimism over a potential United States–China trade agreement, which dampened demand for safe-haven assets.
Profit-taking adds to downside pressure
Silver prices also faced headwinds from profit-taking as investors locked in recent gains amid concerns that the metal had entered overbought territory. Market participants are now awaiting the release of September’s US Consumer Price Index (CPI) later on Friday, though the ongoing US government shutdown has caused delays in several economic data releases.
US-China talks boost market sentiment
US President Donald Trump said on Wednesday that he expects to reach “several agreements” with Chinese President Xi Jinping during their meeting in South Korea next week. The White House later confirmed the meeting will take place on October 30 on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit, according to Reuters.
Silver’s long-term fundamentals remain supportive
The recent rally in silver was underpinned by strong safe-haven demand and growing optimism about the metal’s industrial applications, particularly in electric vehicles, solar energy, and data centers. Additionally, tightening inventories in both London and Shanghai vaults provided further support for prices in recent weeks.
Safe-haven appeal may return amid US government shutdown
Despite the current pullback, silver could regain support as the prolonged US government shutdown continues to weigh on investor sentiment. The impasse has now stretched into its 24th day, marking the second-longest federal funding lapse in US history. A Republican-backed stopgap bill failed in the Senate for the 12th consecutive time on Wednesday evening.
Fed rate cut expectations may underpin silver
The non-yielding nature of silver may once again attract investors if expectations for Federal Reserve (Fed) rate cuts strengthen. The CME FedWatch Tool indicates markets are currently pricing in a 98% probability of a Fed rate cut in October, with a 92% chance of an additional reduction in December, which could lower the opportunity cost of holding precious metals and support a potential rebound in XAG/USD.
