Silver prices fell in European trade on Monday away from seven-week high on active profit-taking, after US President Donald Trump’s 10% tariffs on China. 

Prices are also pressured by the dollar’s surge against a basket of major rivals, with Trump’s trade and economic policies expected to renew inflationary pressures in the US.

Prices

Silver prices fell 2.1% today to $30.68 an ounce, with a session-high at $31.55. 

On Friday, prices lost 1.1% on profit-taking away from a seven-week high at $31.74.

The white metal rose 2.4% last week, the second weekly profit in a row on haven demand. 

Trump’s Tariffs

Trump said the 25% tariffs on Canada and Mexico, and the 10% tariff on China, are a response to illegal immigration and the drug trade.

Both Canada and Mexico, the two biggest US trading partners, vowed retaliation, while China said it’ll challenge Trump’s tariffs at the World Trade Organization.

China

Exports are China’s economic engine, and imposing additional tariffs would impact growth and production.

Recent Beijing data showcases the economic struggles faced by China’s economy in recent months, and the need for further monetary and fiscal stimulus.

US Dollar

The dollar index rose 1.3% on Monday on track for the fifth profit in a row, hitting a three-week high at 109.88 against a basket of major rivals. 

The gains came as US President Donald Trump executed his threats of imposing tariffs on Canada, Mexico, and China, which could boost inflationary pressures once again in America.

The eurozone consumer prices rose 2.5% y/y in January, beating estimates of 2.4%, and up from 2.4% in the previous reading.

Excluding food and energy, prices rose 2.7%, same as before, and beating estimates of 2.6%. 

Gold prices fell in European trade on Monday for the first time in three sessions away from a record high on profit-taking, as the dollar rallies against major rivals. 

The losses are stymied by mounting risk aversion in the markets as haven demand increases, with global trade tensions spiking after the US imposed tariffs on Canada, Mexico, and China.

Prices

Gold prices fell 0.95% today to $2772 an ounce, with a session-high at $2804.

On Friday, gold rose 0.15%, hitting a record high at $2817 on strong investment demand.

Gold rallied 1% last week, marking the fifth weekly profit in a row on haven demand.

US Dollar

The dollar index rose 1.3% on Monday, expanding the gains for the fifth straight session and hitting a three-week high at 109.88 against a basket of major rivals.

The gains came as US President Donald Trump executed his threats of imposing tariffs on Canada, Mexico, and China, which could boost inflationary pressures once again in America.

Trump’s Tariffs

Trump said the 25% tariffs on Canada and Mexico, and the 10% tariff on China, are a response to illegal immigration and the drug trade.

Both Canada and Mexico, the two biggest US trading partners, vowed retaliation, while China said it’ll challenge Trump’s tariffs at the World Trade Organization.

SPDR

Gold holdings at the SPDR Gold Trust rose 0.58 tons on Friday to a total of 864.77 tons.

The euro lost 1.5% in European trade on Monday against the US dollar, sharpening losses for the fifth straight day and plumbing a three-week trough on risk aversion as the US tariff crisis escalates.

The US administration imposed 25% tariffs on Canada and Mexico, and a 10% tariff on China starting February, with all countries vowing retaliation.

ECB policymakers also hinted at continuous policy easing this year, which paves the way for a likely ECB rate cut in March, undermining the euro further.

The Price 

The EUR/USD pair fell 1.5% to $1.0210, the lowest since January 13, with a session-high at $1.0270.

The euro lost 0.3% on Friday, the fourth loss in a row on the prospects of a March ECB rate cut.

It lost 1.3% last week against the greenback, the first loss in three weeks, and the heftiest since November. 

Trump’s Tariffs

Trump said the 25% tariffs on Canada and Mexico, and the 10% tariff on China, are a response to illegal immigration and the drug trade.

Both Canada and Mexico, the two biggest US trading partners, vowed retaliation, while China said it’ll challenge Trump’s tariffs at the World Trade Organization.

Trump sowed confusion in the first two weeks of his administration on the question of tariffs as he kept delaying the step, with some estimating it might just be a negotiating tactic. 

But now with the official implementation, it becomes the most protectionist move that a US President has undertaken in nearly a century.

As expected, the European Central Bank cut interest rates by 25 basis points this week to 2.9%, the lowest since December 2022, and the fifth such cut since the start of the current policy easing cycle in June 2024.

The bank said the rate cut decision is based on the latest analysis of inflation outlook and the impact of the monetary policy.

The ECB noted that inflation has achieved noticeable improvement, and will likely return to the 2% medium-term target this year.

Lagarde 

ECB President Christine Lagarde said the decision to cut rates is linked to the latest eurozone data and especially inflation.

Lagarde said that inflation has started to dip considerably and is moving sustainably towards the target, however the monetary policy overall remains restrictive. 

European Rates

Media sources said that ECB policymakers expect an additional rate cut at the March meeting. 

The current market pricing for an ECB 0.25% rate cut in March stood at 85%.