Tensions Over Tariffs, EU Threatens Retaliation
As U.S. President Trump threatens to increase steel tariffs, the EU has issued a warning, stating that if negotiations fail to reach an agreement, the EU will begin implementing countermeasures against over a hundred billion dollars' worth of American products by mid-July. With just five weeks left until the July 8 tariff reinstatement deadline, the pressing timeline has intensified pressure on all parties.
The Trump administration recently sent out an urgent letter asking countries to submit their best trade negotiation proposals by Wednesday to prepare for upcoming tariff changes. The potential impact of EU countermeasures has heightened market concerns about the escalation of a trade war, becoming a focal point for global investors.
Weak U.S. Economic Data Fuels Rate Cut Expectations
Meanwhile, the weak performance of the U.S. ISM services PMI and ADP employment data has further exacerbated market fears of a slowdown or even a recession in the U.S. economy. U.S. non-farm payrolls added only 139,000 in May, hitting a new low since February, with data from the previous two months significantly revised down by 95,000. This series of weak economic data has increased market expectations that the Federal Reserve may cut interest rates, with soaring rate cut expectations driving a strong rise in silver prices.
A phone conversation between Trump and the Chinese leader has also become a market focus. The two heads of state agreed in the conversation to continue implementing the Geneva Consensus and promote a new round of trade talks. This has brought some hope to the market, but uncertainty over the tariff issue remains a significant risk factor.
Silver Rises Strongly, Gold Trades Sideways
Last week, the precious metals market showed a divergent trend, with gold trading sideways while silver demonstrated strength. The main COMEX gold contract saw an increase of less than 1%, with relatively low capital inflow. In contrast, the main COMEX silver contract rose by more than 9%, with significant capital inflow, indicating strong market demand for silver.
Market analysis suggests that the main drivers of the silver rally are the increased risk aversion and rising interest rate cut expectations. During uncertain economic times, silver often performs better as a safe-haven asset compared to gold, especially as market expectations of a U.S. economic slowdown rise.
Focus on Sino-U.S. Trade Talks and Economic Data
This week, the market will focus on the first meeting of Sino-U.S. trade talks. China will release financial, inflation, and import-export data for May, while the U.S. will also publish May CPI data. These economic data will provide further guidance on the health of the economy, especially amidst concerns about a U.S. economic slowdown, making the interpretation of these data a key focus for investors.
Overall, silver performs outstandingly in the current market environment, benefiting from expectations of an economic slowdown and investor risk aversion. As Sino-U.S. trade negotiations develop further, tariff issues may continue to have a significant impact on market sentiment.
