Silver loses ground even as dollar drops

Silver futures gave up ground in American trade even as the dollar index bounced off January 23 highs for the fourth session, following earlier data and developments from the US, including Federal Reserve Chair Jerome Powell's speech. 

As of 06:41 GMT, silver futures due on March 15 fell 0.27% to $16.525 an ounce from the opening of $16.570, while the dollar index dropped 0.55% to 89.71 from the opening of 90.21. 

Federal Reserve Bank of Cleveland President Loretta Mester spoke about the economic outlook and monetary policy at the Dayton Area Chamber of Commerce Government Affairs Breakfast, while the NFIB Small Business Index rose to 106.9 from 104.9 in December, beating expectations of 106.2. 

Jerome Powell said the Fed is continuing its policy tightening and will remaining cautious on any risks on financial stability, adding that the global economy is recovering strongly, while the monetary policy isn't offering enough well-spread support yet for labor and inflation, even though they're quite close to their targets.

The White House announced a new budget plan, which includes a 10-year $200 billion plan to improve US infrastructure and $710 billion for defense, $80 billion for tech, and $18 billion for the border wall. 

The White House also released its forecasts for GDP growth, putting it at 3% in 2018,compared to 2.4% before, and 3.2% for 2019, compared to 2.7% before, and finally 3.1% in 2020. 

Consumer prices are expected to rise 2.1% in 2018 and 2% in 2019 and 2.2% in 2020, while unemployment is projected to fall to 3.9% in 2018 and 3.7% in 2019 and 3.8% in 2020. 

Finally, the White House expects 10-year treasury bond yields to average 2.6% in 2018, and for the budget deficit to hit $873 billion this year, before reaching $984 billion in 2019.

Congress reached a last-minute temporary budget deal on Friday after a brief hours-long government shutdown, the second one this year, before both the Senate and House of Representatives passed the deal and President Donald Trump signed it into law.

Markets await US inflation data later this week, specifically consumer and producer prices in addition to retail sales, industrial, housing, and consumer confidence data. 

As chances of a Fed rate hike next month increase, silver prices were pushed to two-month lows last week, as the dollar index also rose to two-week highs on surging US treasury bond yields, however the precious metal was propped up by heavy losses sustained by the stock market, which increased demand on silver as a safe haven.