Silver (XAG) Forecast: Tariff Chaos and Fed Pressure Ignite Bullish Silver Outlook

Is Silver the Safe-Haven Play Traders Are Missing?

 

Silver is gaining attention as macro risks stack up. The sharp escalation in U.S.-China trade tensions and the intensifying feud between Donald Trump and Fed Chair Jerome Powell are shaking confidence in both fiscal and monetary policy. For traders, this creates a prime setup for silver—an asset that performs under stress but often flies under the radar compared to gold.

Tariffs have spiked in a matter of days, with U.S. duties on Chinese goods jumping from 104% to 245%, and China retaliating with a 125% hit on U.S. imports. Silver has been strategically spared from these measures, preserving its flow in global markets and highlighting its monetary asset status. That immunity, paired with rising uncertainty, mirrors the 2019 trade standoff when silver rallied 15.2%.

Last week, XAG/USD settled at $32.52, up $0.21 or +0.65%.

Can Trump Force the Fed’s Hand—and What Does That Mean for Silver?

Trump’s aggressive stance toward Powell, including threats of removal, is raising serious concerns over Fed independence. Traders are watching for:

• Rate Cuts: If Trump pressures the Fed into faster rate reductions, silver could benefit from a weaker real yield environment.
• Dollar Risk: Markets may begin to price in a compromised Fed, pushing the dollar lower—typically bullish for silver.
• Inflation Pressures: Tariffs act as indirect taxes, lifting consumer prices. While gold is the go-to inflation hedge, silver often rides the same wave.

Powell’s response remains measured, but institutional strain adds fuel to an already volatile fire.

Is Silver Undervalued Relative to Gold Right Now?

The gold-to-silver ratio remains elevated, trading well above its historical average range of 70:1 to 85:1. This imbalance suggests silver may offer more upside relative to gold if normalization occurs. Traders looking to rebalance may find silver attractive at current levels, especially as central bank credibility and inflation expectations become dominant themes.

Will Industrial Weakness Undermine the Silver Bull Case?

Tariff-related slowdowns could hit industrial silver demand, particularly in electronics and solar sectors. However, key offsets include:

• Tariff Exemption: Silver’s exclusion from tariffs protects supply continuity.
• Investment Demand: As macro risks mount, institutional and retail interest in silver is rising.

These forces help balance the equation for silver’s unique dual role.

Trading Outlook: Is Silver the Smart Bet in a Storm?

Silver is well-positioned to benefit from the storm of trade conflict, monetary policy tension, and inflation fears. While volatility will remain elevated, the setup favors silver exposure:

• Rate cut potential and dollar pressure support upside
• Gold-to-silver ratio points to relative undervaluation
• Institutional uncertainty drives safe-haven demand

For traders with a focus on macro drivers and technical signals, silver offers both protection and opportunity in the current market climate.

More Information in our Economic Calendar.