Silver Price Forecast: XAG/USD shows strength near $32 as global trade war escalates

Source Fxstreet
  • Silver price jumps to near $32.00 as the global trade war has intensified.
  • China, Mexico, and China have announced retaliatory tariffs for the US.
  • Fed dovish bets have weighed on the US Dollar and bond yields.

Silver price (XAG/USD) trades 0.5% higher around $32.00 in North American trading hours on Tuesday. The white metal exhibits strength as the trade war between the United States (US) and its North American peers, and China has intensified.

Canada, Mexico, and China have signaled retaliatory tariffs on imports from the US. On Monday, US President Donald Trump confirmed that 25% tariffs on Canada and Mexico, and 10% on China would come into effect from Tuesday.

Earlier in the day, Canadian Prime Minister Justin Trudeau said that Canada will impose “retaliatory tariffs on US imports” from Tuesday “if US tariffs go into effect”. The Chinese economy also announced tariffs on a slew of agricultural imports from the US. In the North American session on Tuesday, Mexican President Claudia Sheinbaum Pardo said that retaliatory tariffs are coming on Sunday as "Trump starts a global trade fight". 

The scenario of heightened geopolitical tensions increases the safe-haven appeal of precious metals, such as Silver.

Meanwhile, sliding bond yields and the US Dollar (USD) have also strengthened the Silver price. 10-year US Treasury yields tumble to near 4.14%. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 106.00. US bond yields and the US Dollar have faced selling pressure as traders have raised bets supporting the Federal Reserve (Fed) to cut interest rates in the June policy meeting.

According to the CME FedWatch tool, the probability for the central bank to cut interest rates in June has increased to 87% from 71% recorded a week ago.

Silver technical analysis

Silver price moves higher but struggles to extend its upside above the 20-day Exponential Moving Average (EMA), which trades around $31.80.

The 14-day Relative Strength Index (RSI) falls inside the 40.00-60.00 range, suggesting that the bullish momentum has been faded. However, the bullish bias remains intact.

Looking down, the upward-sloping trendline from the August 8 low of $26.45 will act as key support for the Silver price around $30.00. While, the February 14 high of $33.40 will be the key barrier.

Silver daily chart

Silver FAQs

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold rebounds as Dollar retreats ahead of US-China trade talks this weekendGold (XAU/USD) pops just shy of 1% on Friday and heads back above $3,325 at the time of writing. The precious metal’s price is edging higher as markets call the trade deal announced on Thursday between the United States (US) and the United Kingdom (UK)  a ‘nothingburger’.
Author  FXStreet
10 hours ago
Gold (XAU/USD) pops just shy of 1% on Friday and heads back above $3,325 at the time of writing. The precious metal’s price is edging higher as markets call the trade deal announced on Thursday between the United States (US) and the United Kingdom (UK)  a ‘nothingburger’.
placeholder
Dogecoin price jump above $0.20 triggers $13 million in liquidationsDogecoin (DOGE) price edges higher after stepping above $0.20 and climbing to trade around $0.21 at the time of writing on Friday.
Author  FXStreet
10 hours ago
Dogecoin (DOGE) price edges higher after stepping above $0.20 and climbing to trade around $0.21 at the time of writing on Friday.
placeholder
President Trump says he is preparing to drop tariffs against ChinaPresident Donald Trump told reporters Thursday that the 145% import tariffs slapped on China since his return to the White House are likely coming down.
Author  Cryptopolitan
10 hours ago
President Donald Trump told reporters Thursday that the 145% import tariffs slapped on China since his return to the White House are likely coming down.
placeholder
Massive Buy Pressure Hits Binance as Bitcoin Reclaims $100,000Bitcoin’s price has finally reclaimed the $100,000 milestone after ranging below it for several weeks. This latest surge signals renewed momentum in the broader crypto market.
Author  NewsBTC
11 hours ago
Bitcoin’s price has finally reclaimed the $100,000 milestone after ranging below it for several weeks. This latest surge signals renewed momentum in the broader crypto market.
placeholder
ETF Inflows Surge as Bitcoin Reclaims $100,000—But Caution Creeps Into OptionsSpot Bitcoin ETFs registered another consecutive day of inflows on Thursday, coinciding with the coin’s rally back above the $100,000 mark for the first time since February. 
Author  Beincrypto
11 hours ago
Spot Bitcoin ETFs registered another consecutive day of inflows on Thursday, coinciding with the coin’s rally back above the $100,000 mark for the first time since February. 
Related Instrument
goTop
quote