Spot silver declined 2.7% to $74.51 per ounce, extending earlier losses of over 3%.
A 0.2% an ounce rise in the US dollar index pressured bullion, making dollar-priced metals costlier for holders of other currencies. Trading activity remained subdued as several Asian markets, including mainland China and Hong Kong, were shut for the Lunar New Year holidays, while US markets were closed on Monday for Presidents’ Day.Rate-cut expectations shape outlook
Markets are currently pricing in three 25-basis-point rate cuts by the US Federal Reserve this year, according to CME’s FedWatch tool. Precious metals, which do not offer yields, typically gain in lower-rate environments as the opportunity cost of holding them declines.Recent US data showing softer inflation and retail sales supported expectations of a more accommodative policy stance, though investors now await the Personal Consumption Expenditures (PCE) Price Index due February 20, along with FOMC minutes, advance GDP data and flash PMI readings for clearer direction.
Kaynat Chainwala, AVP–Commodity Research at Kotak Securities, said traders locked in gains following last week’s rally, even as broader volatility persisted due to reduced Chinese participation and fluctuations in US technology stocks.
Silver’s trajectory faces mixed drivers
Ross Maxwell, Global Strategy Operations Lead at VT Markets, said silver could test record highs this year if falling real interest rates, a weaker dollar and coordinated monetary easing align. However, he flagged that prolonged higher interest rates, strong equity market performance and a slowdown in global manufacturing could limit upside. He added that while industrial demand from sectors such as solar and electronics remains supportive, steady supply from inventories and recycling may cap sharp spikes.
–With Reuters inputs
