Silver (XAG/USD) eased from its recent gains seen in the previous session, holding around $32.50 during Asian trading hours on Friday (5/16). The metal came under pressure, possibly due to a Financial Times report suggesting that the Trump administration is planning to add several Chinese semiconductor firms to its export blacklist, known as the "entity list." Silver's growing association with the chipmaking industry—due to its critical role in the production of electronics and semiconductors—has heightened market sensitivity to the development.

Meanwhile, safe-haven demand for precious metals, including Silver, has weakened amid signs of easing global trade tensions. The US and China have reportedly reached a preliminary agreement to significantly reduce tariffs. Under the proposed deal, the US would lower tariffs on Chinese imports from 145% to 30%, while China would cut its tariffs on US goods from 125% to 10%. The breakthrough is seen as a positive step towards de-escalating trade tensions between the two economic powerhouses.

Despite the recent decline, silver price declines may be limited as the US Dollar (USD) weakened following economic data that raised expectations of a potential Federal Reserve (Fed) interest rate cut in the near future. Lower US interest rates are generally supportive of silver prices, as they reduce the opportunity cost of holding non-yielding assets such as the precious metal.

However, Fed Chair Jerome Powell warned that inflation may become more unpredictable due to more frequent supply shocks, which could complicate the Fed's efforts to maintain price stability going forward. (Newsmaker23)

Source: FXstreet