Silver Price Forecast: Uncertainty is killing the Greenback

XAG/USD Current price: $107,27

• Tech growth, geopolitical woes, and uncertainty around the Federal Reserve boosted demand for the white metal.
• Europe announced major trade deals with South America and India, hedging against US attacks.
• XAG/USD corrected extreme overbought conditions in the near term, but bulls retain control.

Silver grabbed investors’ attention a couple of months ago and has doubled in value since then. The white metal was changing hands at around $58 per ounce early December and peaked at a record high of $117.74 on Monday, currently hovering just below the $110.00 mark.

There are multiple reasons beyond Silver’s rally, including the exponential technological growth linked to IA and green energy, yet uncertainty around United States (US) President Donald Trump’s policies is a major contributor to Silver’s rally, or better said, broad US Dollar (USD) weakness.

Geopolitical woes include President Trump’s calls to annex Greenland, claiming Denmark is unable to protect the territory from Russia and China, critical for the United States (US) defense. Trump decided to threaten tariffs in different European countries amid their opposition to selling him the territory, but took them back after leaders met in Davos last week.

Europe, however, is nowhere near trusting that the story is over, and is slowly taking measures to hedge against the US trade pressure. The European Union has announced a major trade deal with South America and India, deals that have been on the table for years but have never completed.

France also urged the rest of the EU leaders to deploy the Anti-Coercion Instrument (ACI), a trade policy tool designed during US President Trump's first term, to protect the EU and its Member States from foreign economic coercion, while providing a framework for counteraction. It is worth remembering that European countries own $8 million of US Treasuries and equities, and could shake the US economy by triggering severe US market disruptions.

But is not just about Europe: Trump does not hesitate on escalBut it is not just about Europe: Trump does not hesitate to escalate tensions with other countries.ting tensions with other countries. Just on Tuesday, he announced additional levies on South Korea, as the local Congress is yet to approve a trade deal.

And it is not just a foreign matter: uncertainty also stems from the future of the US monetary policy. The legendary battle between President Trump and the Federal Reserve (Fed) Chair Jerome Powell has reached a zenith with a criminal investigation over the latter, legally revolving around the Fed’s expenses, but actually linked to Trump’s desire for much lower interest rates.

The thing is, Powell’s term ends in May, and investors are eagerly waiting for Trump to announce its successor. Market participants are clearly betting for a hawk, despite not knowing the name, but until the name is out, the question mark will remain.

XAG/USD short-term technical outlook

From a technical perspective, XAG/USD is correcting extreme overbought conditions in the near term. The 4-hour chart shows XAG/UUSD trades above all its moving averages, with the 20-period Simple Moving Average (SMA) rising above the 100 and 200 SMAs, while proving intraday support at around $105.00. The 100 SMA at $90.30 and the 200 SMA at $79.75 provide deeper near-term support. At the same time, the Momentum indicator has eased from recent peaks but remains above its midline, while the Relative Strength Index (RSI) indicator shows a similar pattern, hinting at a slower yet intact buying interest.

In the daily chart, XAG/USD trades around its daily open, pausing its run but far from signaling upward exhaustion. The 20-day SMA heads sharply higher above also bullish 100- and 200-day SMAs. The 20-day SMA currently stands at $87.50, drawing a strong line in the sand, as buyers will likely hold the grip even on deeps towards it. Meanwhile, the Momentum indicator keeps heading sharply higher near extreme readings, while the RSI indicator turned modestly lower, but holds at around 77, reflecting the ongoing pause in the bullish run, yet far from suggesting it's over.

(The technical analysis of this story was written with the help of an AI tool.)