XAG/USD drops below the $32.00 mark, despite ongoing demand for safe-haven assets
FUNDAMENTAL OVERVIEW:
- Silver prices retreat despite heightened safe-haven demand triggered by U.S. tariffs.
- President Trump’s 25% tariff on steel and aluminum imports raises concerns about a broader trade conflict.
- Meanwhile, demand for safe-haven assets intensifies as tensions in the Middle East escalate, following Trump’s call for Israel to end its ceasefire with Hamas.
During Tuesday’s European session, silver prices (XAG/USD) have pulled back from their recent gains, hovering around $31.80 per troy ounce. Despite this, the metal’s downside potential may be limited, as demand for safe-haven assets like precious metals has risen due to heightened risk aversion following the latest US tariffs.
On Monday, US President Donald Trump introduced a 25% tariff on steel and aluminum imports, eliminating all exemptions and invalidating previous trade agreements with key US allies. The decision aims to bolster struggling domestic industries but also raises the likelihood of a larger trade conflict.
Geopolitical tensions in the Middle East may offer support for safe-haven silver prices. President Trump has called on Israel to end its ceasefire with Hamas if hostages are not returned by the weekend, escalating the risk of renewed conflict as both parties accuse each other of violating the agreement.
However, demand for non-interest-bearing silver could face headwinds as US interest rates are expected to remain higher for longer. A Reuters poll of economists indicates that the US Federal Reserve may delay interest rate cuts until the next quarter due to ongoing inflation concerns. Many analysts who had previously expected a rate cut in March have since revised their forecasts, with most now predicting at least one cut by June.
Investors are closely watching the upcoming release of US inflation data and remarks from Federal Reserve Chair Jerome Powell later this week, which could provide further insight into the trajectory of US monetary policy.
SILVER TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Silver is trading within a up channel.
Silver is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 32.35
Immediate support level: 31.25
HOW TO TRADE SILVER
Silver’s price, having previously surged, encountered resistance on a larger timeframe and subsequently declined. After finding support, it attempted a recovery, but is currently facing rejection and demonstrating weak upward momentum. Silver is now retracing towards the support zone. A successful hold of this support level could lead to another upward move.