On Wednesday (February 5th), spot silver prices continued to rise and broke through a three-month high, trading at $32.35 per ounce, with a intraday increase of 0.76%. This increase reflects the rising risk aversion sentiment in the market, mainly affected by the intensification of global trade and economic uncertainty. As trade relations become more complex and the US dollar weakens in a technical correction, silver, a safe haven asset, is favored by investors.

Technical pullback of the US dollar, increased attractiveness of silver

In addition to the tense global trade situation, the technical correction of the US dollar is also an important factor in the rise of silver prices. The US dollar index (DXY) has continued to decline in the past three days, with a current trading level of around 107.70, a slight drop from its previous high. The weakening of the US dollar has provided more upward space for silver priced in US dollars, prompting investors to further increase their demand for silver.

In addition, the market generally expects that the US non farm payroll data (NFP) will have a significant impact on the future direction of the Federal Reserve's monetary policy, further driving up investors' risk aversion. Due to the fact that silver does not pay interest, its attractiveness is closely related to the monetary policies of major central banks. The Federal Reserve expects to implement two interest rate cuts this year, which has increased demand for precious metals such as silver.

The loose policies of major central banks have driven up the price of silver

In addition to the correction of the US dollar, the monetary policy direction of major central banks around the world has also provided support for silver prices. The Bank of Canada (BoC) has suspended quantitative tightening policies and joined the ranks of Riksbank's interest rate cuts. In addition, the European Central Bank (ECB) lowered the deposit facility rate by 25 basis points to 2.75% last week. The loose policies of these central banks have generated more demand in the market for interest free precious metals such as silver.

As market concerns about a global economic slowdown intensify, especially as growth slows in economies such as the United States and Europe, the demand for silver as a safe haven asset may continue to grow. The market's expectation that global central banks will adopt more loose policies has also increased interest in investing in silver.

Future outlook: Silver prices are expected to remain strong

Looking ahead, silver prices may continue to remain strong against the backdrop of increasing global economic and trade uncertainty. Although it may be affected by US non farm payroll data in the short term, in the long run, global trade tensions, a weak US dollar, and loose monetary policies from global central banks are expected to continue supporting the rise in silver prices.

On a technical level, if the price of silver continues to remain above $32, it may continue to challenge higher resistance levels and further push up the price. If silver rebounds below $32, support levels may form around $30. However, considering the current market's risk appetite, silver prices still have strong upward momentum in the short term.

Overall, the attractiveness of silver as a safe haven asset remains strong, especially under the combined effects of global economic uncertainty and major central bank monetary policies. Investors should closely monitor the global trade situation and changes in US economic data, which will have a significant impact on the silver market in the coming months.