Silver price declines on US policy shift, easing geopolitical tensions
NEW YORK (February 2) Silver (XAG/USD) trades sharply lower on Monday, hovering around $81.80 at the time of writing, down 2.0% on the day. The white metal extends the corrective move that began after last week’s steep drop, as markets rapidly reassess the macroeconomic and monetary outlook in the United States (US).
Selling pressure intensified after US President Donald Trump announced the nomination of Kevin Warsh as Chair of the Federal Reserve (Fed). Markets interpret this choice as a signal of a more disciplined and cautious approach to monetary easing. This perception has prompted renewed caution toward non-yielding assets such as Silver, following a powerful rally that had driven prices to record highs and encouraged heavy profit-taking.
At the same time, Silver’s safe-haven appeal is fading as geopolitical tensions ease. Recent talks between the United States and Iran have helped reduce fears of a military escalation in the Middle East, dampening demand for precious metals. This dynamic mirrors recent developments in Gold (XAU/USD), whose sharp correction highlighted how sensitive safe-haven assets are to shifts in geopolitical risk and overall market sentiment.
Cautious remarks from several Fed officials are also reinforcing this trend. Some policymakers have stressed that there is no urgency to cut interest rates further, arguing that the current stance of monetary policy is broadly neutral. This measured communication curbs expectations of rapid easing, weighing on Silver.
Finally, heightened volatility and higher margin requirements in Futures markets have intensified forced selling and the unwinding of speculative positions in Silver. While structural factors such as a long-term supply deficit and continued interest in real assets amid rising government debt remain supportive over the medium term, the market now appears to be entering a consolidation phase after pronounced excesses.
FXStreet
