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5 Mar 2025
Silver Price Forecast: XAG/USD struggles around $32.40 while global trade war intensifies
- Silver price strives to break above $32.40, getting support from the global trade war consistently.
- Growing concerns over the US economic outlook have weighed on the US Dollar.
- Soft ADP Employment data for February would prompt Fed dovish bets.
Silver price (XAG/USD) struggles to extend its upside above the key resistance of $32.40 in Wednesday’s North American session. The white metal remains broadly firm as United States (US) President Donald Trump-led-global trade war has intensified due to counter-tariffs on China, Canada, and Mexico.
Escalating trade war tensions have increased uncertainty over the global economic outlook. Such a scenario improves the appeal of precious metals such as Silver.
Meanwhile, a sharp sell-off in the US Dollar (USD) is also a favorable scenario for the Silver price. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, plunges to near 104.50, the lowest level seen in almost four months. The Greenback weakens as investors worry about the US economic outlook due to escalating tariff war.
During North American trading hours on Wednesday, weak US ADP Employment Change data for February has also weighed on the US Dollar. The ADP reported that private employers added 77K fresh workers, lower than estimates of 140K and the former release of 186K. Soft labor demand in the US private sector is expected to prompt Fed dovish bets, which had already increased lately.
According to the CME FedWatch tool, the likelihood for the Fed to reduce interest rates in June has increased to 85% from 70% recorded a week ago.
Silver technical analysis
Silver price moves higher to near the key resistance of $32.40 plotted from the December 12 high. The asset climbs above the 20-day Exponential Moving Average (EMA), which trades around $31.85.
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.
Looking down, the upward-sloping trendline from the August 8 low of $26.45 will act as key support for the Silver price around $30.00. While, the February 14 high of $33.40 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.