Silver (XAG) Forecast: Will Safe-Haven Demand Spark a New Silver Rally?

Silver Holds Gains After Sharp Rebound; Volatility Remains High

Silver is trading mixed on Monday after an early-session sell-off, with prices plunging to $30.69 before recovering to $31.38. The metal found strong support near key technical levels, with buyers stepping in at $30.53, the 50-day moving average of $30.42, and the 200-day moving average of $30.16. On the upside, resistance is seen in the $31.81 to $32.33 zone.

Volatility remains a dominant theme in silver, as traders react to a stronger U.S. dollar and shifting market sentiment. The sharp intraday recovery signals that demand remains resilient despite external pressures.

At 13:09 GMT, XAG/USD is trading $31.33, Unchanged.

Trump’s Tariffs Spark Safe-Haven Demand for Silver

Silver’s rebound mirrors the price action in gold, which surged after U.S. President Donald Trump announced steep tariffs on Mexico, Canada, and China. The 25% tariffs on Canadian and Mexican imports, along with a 10% duty on Chinese goods, have escalated fears of a global trade war.

With Canada and Mexico issuing retaliatory measures and China vowing countermeasures through the World Trade Organization, investors are seeking safe-haven assets. Silver, often tracking gold during periods of economic uncertainty, has seen renewed demand despite earlier weakness. The ongoing geopolitical tensions are adding a layer of support to silver prices as traders look to hedge against inflation and slower global growth.

Dollar Strength Pressures Silver but Underlying Demand Holds

The U.S. dollar surged to a three-week high, initially weighing on silver prices. A stronger greenback makes dollar-denominated metals more expensive for foreign investors, limiting immediate upside potential. However, the safe-haven appeal of silver has kept the market from breaking lower.

U.S. bond yields reflect rising investor anxiety, with the 10-year Treasury yield dropping by 4 basis points to 4.525%, while the 2-year yield edged slightly higher to 4.263%. Traders are closely watching upcoming economic reports, particularly U.S. job openings and nonfarm payroll data, which could provide further insight into the Federal Reserve’s next policy move.

Recent inflation data, including a 0.3% rise in consumer spending as per the PCE Price Index, suggests that the Fed may remain cautious on rate cuts. A delay in easing monetary policy could keep the dollar strong, posing a headwind for silver in the short term.

Silver Market Outlook: Key Levels to Watch

Despite early weakness, silver’s ability to rebound from $30.69 highlights strong technical support. If prices break above $31.81, further upside toward $32.33 is possible. However, failure to hold above $30.53 could open the door to further downside, with key support at $30.42 and $30.16.

Traders should monitor the U.S. employment reports and any developments on tariff disputes, as both factors could influence silver’s next move. While a strong dollar remains a challenge, persistent economic uncertainty and inflation concerns continue to support silver’s long-term bullish case.

More Information in our Economic Calendar.