Silver Price Forecast: XAG/USD trades with caution near $38 as global trade tensions cool down

• Silver price struggles for firm footing as the US-EU tariff deal has diminished fears of global trade disruption.

• Trade talks between the US and the EU will resume on Tuesday.

• The Fed is expected to leave interest rates steady on Wednesday.

Silver price (XAG/USD) trades cautiously near its weekly low around $38.00 during the Asian trading session on Tuesday. The white metal struggles to gain ground as its safe-haven demand has diminished, following the announcement of a trade agreement between the United States (US) and the European Union (EU).

Over the weekend, both sides of the Atlantic confirmed that they have reached a framework under which Washington will charge 15% tariffs on imports from Brussels. The announcement of the trade framework has diminished fears of a damaging global trade war.

Meanwhile, investors await the outcome of high-level trade talks between the US and China, which are taking place in Stockholm. Officials from both economies are scheduled to resume trade discussions on Tuesday, which started on Monday.

According to a report from Reuters, the US and China are working to resolve “key trade and technology disputes”, with China seeking relief from US tariffs and curbs on tech exports.

The safe-haven appeal of the Silver price would ease further if both economies manage to resolve trade disputes. However, its demand as an industrial input will increase as trade harmony would improve the business sentiment of Chinese business owners.

This week, investors will also focus on a slew of US economic data and the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. According to the CME FedWatch tool, the Fed is certain to leave interest rates steady in the range of 4.25%-4.50%.

Higher interest rates by the Fed for longer bode poorly for non-yielding assets, such as Silver.

Silver technical analysis

Silver price corrects to near the 20-day Exponential Moving Average (EMA) around $38.00 from its recent highs of $39.53 posted last week.

The 14-day Relative Strength Index (RSI) falls below 60.00, suggesting that the bullish momentum has been faded.

Looking down, the June 18 high of $37.32 will act as key support for the major. On the upside, the June 23 high near $39.53 will be a critical hurdle for the pair.

Silver daily chart