Silver (XAG) Forecast: Trade War Fears—Traders Brace for More Volatility

Trump’s Tariffs and Their Impact on Silver Prices

Silver markets are on edge as traders assess the fallout from President Donald Trump’s announcement of 25% tariffs on steel and aluminum imports. The move has already rattled global markets, sending stock futures lower and causing shifts in currency valuations. With inflation concerns rising and the Federal Reserve’s policy outlook in focus, silver prices could see heightened volatility in the days ahead.

At 12:28 GMT, XAG/USD is trading $32.24, up $0.44 or +1.37%.

Tariffs, Inflation, and the Fed’s Dilemma

One of the biggest concerns stemming from new tariffs is inflation. Higher import costs often translate into rising prices for consumers and businesses. This puts pressure on the Federal Reserve to keep interest rates elevated to curb inflationary risks.

Currently, traders have priced in 36 basis points of Fed rate cuts for the year, down from 42 basis points previously. If tariffs further stoke inflation, the odds of deeper rate cuts will decline, which could limit silver’s upside in the short term. Higher rates increase the opportunity cost of holding non-yielding assets like silver and gold, typically weighing on precious metals.

Currency Market Reaction and Silver’s Outlook

The U.S. dollar strengthened following the tariff announcement, with the Japanese yen, Canadian dollar, and euro all weakening. A stronger dollar often acts as a headwind for silver, making it more expensive for international buyers. Meanwhile, China’s yuan slipped past the 7.3 per dollar level, highlighting market unease over potential trade disruptions.

Silver is currently finding support at $31.81, with an upside target at $32.53. A breakout above last week’s high of $32.65 could set the stage for a move toward $34.87. However, if the dollar continues to rally, silver could struggle to maintain upward momentum.

Gold’s Response and Its Implications for Silver

Gold prices have surged to nearly $2907 per ounce, reflecting increased demand for safe-haven assets. Historically, however, higher tariffs have not always translated into sustained gains for gold. Since silver often follows gold’s lead, traders should be cautious about expecting an automatic rally.

Gold’s ability to hold recent gains will likely influence silver’s next move. If inflation fears persist and traders seek hedges against economic uncertainty, silver could benefit alongside gold. But if Fed officials signal a commitment to tighter monetary policy, both metals could face selling pressure.

Market Forecast: Volatility and Key Levels to Watch

With reciprocal tariffs expected from trading partners, silver markets will likely see increased volatility. Short-term resistance remains at $32.65, with a breakout potentially targeting $34.87. However, if the Fed takes a hawkish stance or the dollar strengthens further, silver could retreat below $31.81.

Traders should stay alert for updates on tariff policies and Fed commentary, as both will play a crucial role in determining silver’s next move.

More Information in our Economic Calendar.