Silver Price Forecast: XAG/USD maintains position above $31.50 due to risk-off mood
- Silver price finds support from safe-haven demand as concerns over a global tariff war escalate.
- The White House confirmed that President Trump has signed an order raising tariffs on Chinese imports to 20%.
- Canada’s Prime Minister’s Office announced plans to impose retaliatory 25% tariffs on US imports if Washington's tariffs take effect.
Silver price (XAG/USD) extends its gains for the second consecutive session, trading near $31.70 per troy ounce during Asian hours on Tuesday. Silver gains traction as investors seek safe-haven assets amid rising risk aversion, while market participants assess the economic outlook as US President Donald Trump advances plans to impose tariffs on key trade partners.
On Monday, the White House confirmed that President Trump signed an order raising tariffs on Chinese imports to 20%. However, similar measures for Mexico and Canada remain pending. Trump also reiterated that reciprocal tariffs will take effect on April 2 for countries that impose duties on US goods.
In response, Canada’s Prime Minister's Office announced that retaliatory tariffs on US imports would be imposed starting Tuesday, provided US tariffs go into effect. Initially, Canada will implement a 25% tariff on US imports worth C$30 billion.
Meanwhile, China’s Commerce Ministry stated early Tuesday that it would take "necessary countermeasures" to defend its economic interests. The ministry reaffirmed its strong opposition to the US decision to introduce an additional 10% tariff on Chinese imports starting Tuesday.
Recent US factory data provided mixed signals. The ISM Manufacturing PMI fell to 50.3, slightly below expectations of 50.5 and down from January’s 50.9. Conversely, S&P Global’s final Manufacturing PMI for February exceeded forecasts at 52.7, improving from its preliminary estimate.
Investors now turn their attention to the ADP employment report on Wednesday and the Nonfarm Payrolls report on Friday for further insights into the Federal Reserve’s (Fed) interest rate outlook.
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.