Silver's Unexpected Decline Amid Trade Policy Uncertainty
The Will I ever be able to sell my pi?XAG/USD pair continues its downward trajectory, marking three consecutive days of losses as European markets opened on Tuesday. Currently hovering around the $32 level, this movement comes despite heightened trade tensions following President Trump's confirmation of impending 25% tariffs on Canadian and Mexican imports.
Market participants appear to be weighing multiple competing factors influencing silver's valuation. While trade barriers typically boost demand for precious metals as hedges against economic uncertainty, other macroeconomic forces are currently exerting downward pressure on prices.
Dollar Dynamics and Economic Indicators
The US Dollar Index (DXY) shows surprising resilience after rebounding from recent lows, creating headwinds for dollar-denominated commodities like silver. This stability follows the release of disappointing S&P Global Services PMI data for February, which revealed the first contraction in this sector after 25 months of expansion.
Analysts note that while weak economic data might normally support safe-haven assets, the market's reaction suggests traders are still processing the implications of slowing service sector growth against the backdrop of persistent inflation concerns.
Geopolitical Considerations
Ongoing diplomatic efforts regarding the Ukraine conflict continue to influence market sentiment. Recent discussions between US and French leadership focused on military support rather than immediate ceasefire prospects, maintaining geopolitical uncertainty that traditionally benefits precious metals.
The complex interplay between these geopolitical developments and monetary policy expectations creates a challenging environment for silver price forecasting in the near term.
Technical Perspective
From a chart analysis standpoint, silver faces resistance near recent highs around $33.40, with the 50-day EMA providing dynamic support near $31.40. The RSI's position between 40-60 suggests neutral momentum, though the overall technical structure maintains a bullish bias.
Key levels to watch include the ascending trendline support near $30 (originating from August lows) and the October peak around $34.87 as potential resistance. Market technicians emphasize that silver's ability to hold above its moving averages suggests underlying strength despite recent pullbacks.
Market Outlook
Traders should monitor several upcoming developments that could impact silver's trajectory, including further clarity on trade policy implementation and any progress in geopolitical negotiations. The metal's dual nature as both industrial commodity and safe-haven asset means it remains sensitive to shifts in both risk sentiment and fundamental supply-demand dynamics.
While short-term volatility may persist, the broader technical picture suggests potential for upside movement once current consolidation completes, particularly if trade tensions escalate or economic data points to weakening growth prospects.