Silver Holds Below $32.50 Amid US Economic Uncertainty and Moody’s Downgrade

Silver Under $32.50, Upside Potential as US Economic Uncertainty Returns

The price of silver (XAG/USD) continues to decline for the second straight session, trading near $32.30 per troy ounce during Monday’s Asian trading hours. Despite recent weakness, analysts believe the downside could be limited due to a resurgence in safe-haven demand driven by renewed concerns over the US economic outlook and fiscal sustainability.

Last week, Moody’s Investors Service downgraded the US credit rating by one notch—from Aaa to Aa1—citing rising federal debt and growing interest payment burdens. This follows earlier downgrades by Fitch Ratings in 2023 and Standard & Poor’s back in 2011. Moody’s now estimates that US federal debt will rise to around 134% of GDP by 2035, up from 98% in 2023, with the federal deficit expected to expand to nearly 9% of GDP due to rising entitlement spending, weaker tax revenues, and higher debt servicing costs.

While these developments should be supportive for silver as a traditional safe-haven asset, broader global risk sentiment has improved, limiting immediate upside momentum. Markets have welcomed signs of a potential US-China trade truce, with both sides agreeing to reduce tariffs—Washington cutting tariffs on Chinese goods from 145% to 30%, and Beijing reducing duties on US imports from 125% to 10%.

Additional optimism stems from hopes for a US-Iran nuclear deal and upcoming diplomatic talks between US President Donald Trump and Russian President Vladimir Putin aimed at reducing tensions surrounding the war in Ukraine.

In this mixed environment—where global optimism competes with domestic US fiscal concerns—silver may remain range-bound in the short term but retains longer-term upside potential should economic instability worsen or geopolitical risks escalate.