Silver Price Forecast: XAG/USD rally hits pause as US says no to tariffs on critical minerals
- Silver price declines to near $90.40 from its all-time high of $93.90 posted on Wednesday.
- The US defers imposition of tariffs on imports of critical minerals.
- Investors expect the Fed to hold interest rates steady later this month.
Silver price (XAG/USD) trades over 2% lower to near $90.40 during the Asian trading session on Friday. The white metal struggles to extend its rally after posting a fresh all-time high near $93.90 on Wednesday.
The asset has come under pressure as the United States (US) deferred tariffs on imports of critical minerals. On Thursday, US President Donald Trump ordered Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick to "enter into negotiations with trading partners to adjust the imports of critical minerals so that such imports will not threaten to impair the national security of the economy”, Reuters reported.
The statement indicates that the US is insufficient to become self-reliant for its needs of critical minerals, which is used in various industries.
Earlier, the Silver price rallied as traders loaded it significantly in fear of the imposition of tariffs on its imports.
Technically, the scenario is favorable for the Silver price in the long run, as it highlights its necessity by the US.
Additionally, firm expectations that the Federal Reserve (Fed) will hold interest rates steady in the policy meeting later this month have also weighed on the Silver price. Theoretically, a pause in the Fed’s monetary easing campaign weighs on non-yielding assets, such as Silver.
Silver technical analysis
XAG/USD trades lower at $90.63 as of writing. The 50-hour Exponential Moving Average (EMA) rises and sits at $90.06, supporting the short-term uptrend as the price holds above it. The 50-hour EMA's upward slope underscores an improving trend-following support.
The range shift move by the 14-hour Relative Strength Index (RSI) from the 60.00-80.00 zone to the 40.00-60.00 area suggests that the bullish momentum has terminated at least for now.
Going forward, the all-time high of $93.90 will remain a key barrier for the Silver price. On the downside, the price could fall to the January 13 low of $83.62 if it breaks below the January 15 low of $86.19.
(The technical analysis of this story was written with the help of an AI tool.)
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.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
