Silver (XAG) Daily Forecast: Tariff Concerns in Solar Sector Impact Future Silver Demand

Market Overview

Silver prices (XAG/USD) declined to $30.25 per troy ounce on Tuesday, as the demand for safe-haven assets weakens in a risk-on market environment. Investors are shifting to riskier assets, spurred by market optimism over US President-Elect Trump’s anticipated fiscal policies.

The rally in the US Dollar, reaching a four-month high, further pressures silver, as a stronger dollar makes silver more expensive for foreign buyers.

China’s recent economic measures have also dampened the outlook for industrial metals. Last week, the Chinese government announced a 10 trillion yuan debt package to boost local financing and economic stability, yet it fell short of market expectations for direct stimulus.

This disappointment has hurt the industrial metals market, including silver, which plays a significant role in solar energy production due to its use in photovoltaic cells.

China’s Economic Concerns Weigh on Industrial Metals

Chinese solar panel manufacturers, crucial consumers of silver, are scaling back production amid concerns about potential tariffs on imports under the Trump administration. Morgan Stanley estimates these tariffs could reach as high as 60% on Chinese solar products, creating uncertainty in silver’s future demand.

Additionally, China’s Consumer Price Index (CPI) rose only 0.3% year-over-year in October, missing forecasts, while the monthly CPI saw a decline of 0.3%. This muted inflation data signals slowing growth, raising concerns about the strength of China’s recovery and its impact on global demand for metals.

Rising US Dollar and Treasury Yields Add to Silver’s Decline

The strength of the US Dollar Index (DXY), hovering near 105.70, and rising US Treasury yields, with the 2-year and 10-year bonds at 4.28% and 4.32% respectively, have compounded the downward trend in silver.

While Federal Reserve Chair Jerome Powell recently assured that the Fed’s approach remains data-driven, the Dollar’s strength and the Fed’s cautious stance on rate cuts signal potential challenges ahead for silver prices.

Short-Term Forecast

Silver remains under pressure near $30.25, struggling to hold support as a strong dollar and risk-on sentiment weigh on demand. Key resistance lies at $30.48.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver is trading at $30.25, down 1.39%, as it struggles to hold key support levels amid bearish momentum. The immediate pivot point at $30.48 now serves as a critical resistance level, with a break above it necessary to shift sentiment more positively. Immediate resistance lies at $30.80, followed by $31.18 and $31.55.

On the downside, support sits at $30.10, with further support levels at $29.80 and $29.50 if the selling pressure intensifies.

The 50-day EMA at $31.34 and the 200-day EMA at $32.24 reinforce the bearish bias, suggesting a downtrend is likely to continue unless silver moves above $30.48. Downward trendlines and bearish engulfing candles add weight to this cautious outlook.