Silver Price Forecast: XAG/USD slips below $33.50 due to easing US-China trade concerns
- Silver prices dip as reports suggest China may ease tariffs on certain US imports.
- Beijing is reportedly considering a suspension of its 125% tariffs on select American goods.
- Silver may rebound if the Trump administration moves to reduce tariffs on Chinese imports.
Silver price (XAG/USD) inches lower following two days of gains, trading around $33.40 per troy ounce during the European hours on Friday. The metal’s safe-haven appeal weakens as reports emerge suggesting China may lift tariffs on certain US imports.
According to Bloomberg, China is considering suspending its 125% tariffs on select American goods, including medical equipment, ethane, and aircraft leasing. Sources indicate that Chinese officials are particularly focused on waiving tariffs for aircraft leases. However, neither China’s Ministry of Finance nor the General Administration of Customs has made any official statements.
The US Dollar (USD) gains traction on optimism surrounding trade negotiations, making dollar-denominated Silver less attractive to traders with foreign currencies. Reuters reported early progress in US trade talks with key Asian allies like South Korea and Japan, further supporting the Greenback.
Despite the recent dip, Silver prices could recover if the US, under the Trump administration, chooses to lower tariffs on Chinese goods, contingent on the progress of potential negotiations. China has shown a willingness to engage in dialogue. As silver is a crucial component in industries such as electronics, solar energy, and automotive manufacturing, any improvement in US-China trade relations could boost demand for the metal.
Michael Hart, President of the American Chamber of Commerce in China, welcomed the news of both countries reviewing tariffs. Hart noted that while discussions around exclusion lists for specific product categories are underway, no official policies have been released. Both the Chinese Ministry of Commerce and the US Department of Commerce are currently gathering stakeholder input.
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
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
