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10 Feb 2025
Silver Price Forecast: XAG/USD surges to near $32.30 as Trump tariffs trigger safe-haven demand
- Silver price rallies to near $32.30 amid an increase in its safe-haven demand.
- US President Trump is poised to raise 25% tariffs on all imports of steel and aluminum.
- The safe-haven appeal of the US Dollar fades.
Silver price (XAG/USD) soars to near $32.30 in Monday’s European session. The white metal strengthens as investors turn risk-averse after United States (US) President Donald Trump threatens to raise 25% tariffs on imports of steel and aluminum and reciprocal tariffs over nations where he sees unfair trade practices.
Technically, the scenario of heightened global tensions improves the safe-haven bid of precious metals, such as Silver.
The appeal of the US Dollar (USD) also strengthened after Trump’s tariff warnings on metals, but later, it surrendered its entire gains. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, retreats to near 108.10 from the intraday high around 108.50 and is almost flat at press time. The Silver price has also benefitted from the retracement in the US Dollar.
President Trump’s tariff threats have renewed fears of a global trade war. However, a league of market participants still believe that Trump is using tariffs as a tool to have better negotiations against the US’s trading partners.
Going forward, investors will focus on Federal Reserve (Fed) Chair Jerome Powell’s testimony before the House of Representatives on Tuesday and Wednesday. They will look for cues about how long the Fed will keep interest rates in the current range of 4.25%- 4.500%.
Silver technical analysis
Silver price strives to break above the immediate resistance of $32.50, which is plotted from the December 9 high. The outlook of the white metal remains bullish as the 20-day Exponential Moving Average (EMA) is sloping higher near $30.90.
The 14-day Relative Strength Index (RSI) oscillates in the 60.00-80.00 range, suggesting that the momentum is bullish.
Looking down, the upward-sloping trendline from the August 8 low of $26.45 will be the key support for the Silver price around $29.50. While, the October 31 high of $33.90 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.