Silver (XAG/USD) Forecast: Market Volatility and Trade Tariffs Impact Prices.
Fundamental Analysis: Trade Tensions and Silver’s Industrial Demand
- Silver prices fell sharply below the key $33.62 pivot, triggering a significant sell-off and pushing prices down to the lowest levels since March 11.
- The semiconductor industry, a major consumer of silver, faces heightened uncertainty due to newly imposed tariffs, reducing the industrial demand outlook.
Silver prices declined on Thursday as traders reacted to technical weaknesses and intensifying global trade disputes. Spot silver slipped under the crucial $33.62 pivot, accelerating a downturn that sent prices plummeting to a critical support level at $32.53. This zone aligns with the 61.8% Fibonacci retracement and the 50-day moving average, underscoring its significance in market dynamics.
The industrial demand for silver weakened after the U.S. government introduced a 10% baseline tariff on imports, along with substantially increased duties on select nations. The semiconductor sector, a key driver of silver consumption, now faces greater trade barriers, affecting demand from leading manufacturers. As a result, financial markets in China, Japan, and Europe experienced notable losses, while U.S. futures turned negative due to revised growth expectations and inflationary concerns.
As trade tensions escalate and manufacturing struggles persist, silver remains under pressure. A decisive break below $32.53 could pave the way for a further decline towards $31.81, with additional downside risk if market sentiment remains bearish. The new semiconductor tariffs create a substantial obstacle for silver’s demand recovery. Unless investor sentiment improves or trade policies shift, silver is expected to face continued selling pressure.
XAG/USD Technical Analysis: Bearish Momentum Prevails
Technical Overview:
- XAG/USD remains in a downward channel.
- Trading below both the 10-day and 50-day Simple Moving Averages (SMA).
- RSI (Relative Strength Index) is in the buying zone, but the Stochastic oscillator signals a continued negative trend.
Key Levels to Watch:
- Immediate Resistance: $32.64
- Immediate Support: $31.73
Trading Strategy for XAG/USD
Silver initially attempted an upward move but encountered strong resistance, leading to a swift retracement. The metal faced intense selling pressure, forming a Bearish Engulfing pattern, which indicates further downside potential.
Currently, silver is trading near a crucial support zone, and if this level fails, the price could continue to drop. The bearish trend remains dominant, with little indication of reversal unless fundamental shifts occur in the market.
Trade Recommendation:
- Entry (Limit Sell): $32.23
- Take Profit: $31.11
- Stop Loss: $32.98