Silver Price Forecast: XAG/USD recovers intraday losses amid caution on Trump’s tariff threats

Silver price bounces back from the intraday low of $32.50 as market sentiment is slightly cautious on Trump’s tariff threats.
US Trump confirms more Russia-Ukraine peace talks.
Investors await FOMC minutes for fresh guidance on the monetary policy outlook.

Sagar Dua FXStreet

Silver price (XAG/USD) recovers its intraday losses and turns flat around $33.00 in North American trading hours on Wednesday. The white metal bounces back as its safe-haven appeal remains firm amid fears of a global economic slowdown from potential tariffs by United States (US) President Donald Trump.

President Trump threatened to impose 25% tariffs on automobiles, pharmaceuticals and semiconductors and that tariffs could increase substantially next year. Trump added that some tariffs could enacted by April, the same timeframe in which he has planned to unveil the reciprocal tariff plan too.

While Silver’s safe-haven demand has remained firm due to Trump’s tariff threats, its upside could remain capped due to optimism over the Russia-Ukraine truce. Trump said on Tuesday that he discussed with Russia in Riyadh about ending the war in Ukraine and confirmed to have more talks along with leaders from Ukraine and Europe. More positive developments in Russia-Ukraine peace talks would ease the safe-haven premium of the Silver price.

Meanwhile, the US Dollar (USD) trades higher ahead of the release of the Federal Open Market Committee (FOMC) minutes of the January policy meeting, which will be published at 19:00 GMT. Signs of the Federal Reserve (Fed) holding interest rates at their current levels for longer would strengthen the US Dollar. Such a scenario bodes poorly for the Silver price.

Silver technical analysis

Silver price struggles to break above the key resistance of $32.98, which is plotted from the November 5 high. The outlook of the white metal is bullish as the 50-day Exponential Moving Average (EMA) has been sloping higher, which trades around $31.20.

The 14-day Relative Strength Index (RSI) oscillates in the 60.00-80.00 range, suggesting that the momentum is strongly bullish.

Looking down, the February 11 low of $31.26 will be the key support for the Silver price. While, the October 31 high of $33.90 will be the key barrier.

Silver daily chart

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.

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