Silver prices continued to drop on Friday as the metal headed for its second weekly decline on a stronger dollar and profit-taking. The recent renewed weakness highlighted the extent of the technical... ...

Economic Outlook - The dollar is experiencing underlying weakness, with expectations of a -50 basis point interest rate cut by the FOMC in 2026, while the BOJ is anticipated to raise rates by +25 basis points in the same year [1] - The markets are pricing in a 12% chance of a -25 basis point rate cut at the upcoming policy meeting on March 17-18 [1] Dollar Performance - The dollar reached a 4-year low following President Trump's comments expressing comfort with its weakness, compounded by foreign capital outflows due to a growing budget deficit and political polarization [2] - The dollar index (DXY) rose to a 1-week high, increasing by +0.66%, supported by the nomination of Keven Warsh as the next Fed Chair, who is perceived as hawkish [5] Manufacturing and Economic Indicators - The US January ISM manufacturing index increased by +4.7 to 52.6, surpassing expectations of 48.5, marking the strongest expansion in over 3.25 years [3][5] - German December retail sales rose by +0.1% month-over-month, aligning with expectations, while November sales were revised upward [7] Currency Movements - The euro fell to a 1-week low, down by -0.58%, pressured by a stronger dollar, although it found some support from an upward revision of the Eurozone January S&P manufacturing PMI [6] - The yen declined by +0.56% against the dollar, influenced by comments from Japanese Prime Minister Takaichi regarding the benefits of a weak currency for exports [8] Precious Metals Market - April COMEX gold closed down -92.50 (-1.95%), and March COMEX silver fell -1.522 (-1.94%), reaching 4-week lows due to a stronger dollar and easing geopolitical risks [11][12] - Strong central bank demand for gold is evident, with China's PBOC reserves increasing by +30,000 ounces to 74.15 million troy ounces in December, marking the fourteenth consecutive month of increases [18]

Core Insights - Gold and silver prices have declined as investors take profits after a significant annual rally, with CME Group increasing margins on precious metal futures for the second time in a week [1][2] Price Movements - Spot gold prices decreased by 0.8% to $4,313.59 per ounce, marking a one-week low [2] - Spot silver prices fell 6.2% to $71.77 per ounce, retreating from earlier gains above $80 [2] Annual Performance - Gold has risen over 64% year-to-date, on track for its best annual performance since 1979 and marking the third consecutive positive year [3] - Silver has significantly outperformed gold in 2025, with annual gains nearing 150%, also the best yearly performance since 1979 [4] Market Drivers - The rally in gold prices has been driven by U.S. interest rate cuts, tariff tensions, and strong demand from ETFs and central banks [3] - Silver's price surge is attributed to low supply, high demand from India, and industrial needs alongside tariffs [4]