Silver price increased slightly after seeing a decline of over 1% previously, maintaining around $33.10 per troy ounce during Asian trading hours on Friday. Commodities like Silver have been affected by concerns over the rising US fiscal deficit, though safe-haven demand may counteract these challenges.

The US House of Representatives narrowly passed a budget proposal expected to increase the deficit by $3.8 billion, offering tax breaks to tips and car loans. Silver’s value is tempered by worries about the US economy and trade tariffs, impacting sectors like photovoltaics, which utilise Silver.

In early 2025, China’s wind and solar capacity saw a 60GW boost, reaching nearly 1,500 GW, driving industrial demand for Silver. European solar power output also increased by 30% in the first quarter, adding pressure on Silver supplies.

Moody’s downgraded the US credit rating to Aa1 amid fiscal outlook, forecasting US federal debt reaching 134% of GDP by 2035. Factors contributing include higher debt costs, growing entitlement programs, and reduced tax revenues, reflecting negatively on fiscal health.

With the price of silver hovering just above $33 per troy ounce after rebounding from a modest drop, we’re seeing the effect of short-term sentiment colliding with broader macroeconomic pressures. The reaction stems largely from fiscal movements out of Washington, notably the narrow approval of a US budget extension that’s likely to expand the deficit by billions. It’s not just about the raw numbers—this ties directly into how investors interpret government commitment to sustainable spending and monetary stability.

The additional tax incentives proposed—targeting gratuities and vehicle financing—point to an effort to ease burdens on specific consumer groups, but come at the expense of increasing structural imbalances. That raises questions about the ability of any single political measure to support long-term balance while also stimulating pockets of the economy. Those of us watching the metals market realise that these kinds of fiscal steps often generate abrupt recalibrations across commodities, especially those like silver that straddle both industrial and safe-haven roles.

At the same time, industrial consumption remains a strong tailwind. China’s rapid scale-up in renewable capacities—notably in wind and solar—has not only amplified domestic demand but also tightened global supply chains. A 60GW expansion, while headline-grabbing, also means that resource inputs like silver are increasingly diverted towards production rather than stores. This demand pattern is matched in parts of Europe, where a 30% uplift in solar generation in just three months suggests that pressure on silver’s industrial availability could continue to mount through the second quarter.

Then there’s the downgrade by Moody’s, which stripped the US of its top-tier credit status. It’s not just a symbolic gesture—the move reflects measurable concerns about trends we’ve all been watching: ballooning debt, mounting interest payments, and shrinking revenue streams from taxes. With federal debt on track to hit 134% of GDP by 2035, there’s a longer-term narrative forming here, which affects confidence and holding patterns.

For us, that means the precious metals market is caught between two forces. On one hand, there’s industrial pull from energy transformations; on the other, financial uncertainty drives allocation into hedging instruments. Silver stands at the intersection of both. Volatility isn’t only being driven by speculative flows or yield differentials—it’s being reinforced by shifts in physical demand and structural fiscal disarray.

Short-term traders might notice positioning changes in derivatives tracking silver, reflecting a potential recalibration ahead of expected economic indicators or central bank commentary. The US deficit trajectory has started to feed into inflation-linked products, and that naturally extends into asset classes that thrive under perceived instability. What’s different now is that the economic backdrop has moved beyond rate hikes or quarterly prints—it’s now about sustainability, and the credibility of decision-making.

While we remain focused on contracts expiring in the near term, there’s also an increase in activity tied to longer-dated options, particularly around rollovers. That suggests a creeping belief that current macro conditions, especially in the US, aren’t likely to reverse soon. It’s no longer just a binary bet on demand versus supply; it’s become a multi-layered puzzle of industrial growth, geopolitical tensions, and fiscal fragility.

The next few weeks may see derivative positions reflect more cautious optimism—still anchored by elevated support zones—but increasingly shadowed by global policy navigation. The intersection of energy transition commitments and growing fiscal burdens could shift implied volatility further, especially across forward months. Risk remains sharply asymmetric if political developments or new economic data upend prevailing assumptions.