• Silver price extends its losses as market sentiment improves amid US-China trade deal optimism.
• The non-interest-bearing Silver may gain ground as traders expect the Fed to deliver a 25-basis-point rate cut on Wednesday.
• The US government shutdown has sparked debate over the Federal Reserve’s policy outlook.

Silver price (XAG/USD) remains subdued for the third successive session, trading around $46.80 per troy ounce during the Asian hours on Tuesday. The price of the safe-haven Silver declined 3.78% in the previous session amid risk-on sentiment, driven by the optimism over the United States (US)-China trade negotiations.

Senior officials from the US and China announced over the weekend in Malaysia that they had reached a framework agreement on tariffs and other major issues, setting the stage for Presidents Trump and Xi to finalize the deal during their meeting later this week in South Korea.

US Treasury Secretary Scott Bessent said that President Trump’s threat to impose 100% tariffs on Chinese goods “is effectively off the table.” Bessent added that China has agreed to make “substantial” soybean purchases and to postpone its rare-earth export controls “for a year while they re-examine it.”

However, the downside of the grey metal could be limited due to the increased likelihood of a rate cut by the US Federal Reserve (Fed) on Wednesday. The Fed is widely expected to lower interest rates by another 25 basis points, bringing the benchmark rate to 3.75-4.00%, at its October meeting. The CME FedWatch Tool indicates that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 95% possibility of another reduction in December.

Moreover, market sentiment may turn cautious as the US government shutdown has ignited debate among Federal Reserve officials, as policymakers weigh whether to cut rates soon to support a weakening labor market or maintain current levels amid inflation that remains persistently above the Fed’s 2% target.