Silver price (XAG/USD) trades 1.5% lower, slightly below $48.00 during the late Asian trading session on Monday. The white metal faces selling pressure as the appeal of safe-haven assets has diminished on hopes that the United States (US) and China will reach a bilateral trade deal soon.
The optimism over the US-China trade deal increased following comments from US Treasury Secretary Scott Bessent stated that recently announced 100% additional tariffs by the White House on imports from Beijing won’t proceed.
“No, I’m not, and I’m also anticipating that we will get some kind of a deferral on the rare earth export controls that the Chinese had discussed,” Bessent said in an interview with NBC’s “Meet the Press” program after he was asked whether the White House would continue with 100% additional tariffs threatened on China. These comments from Bessent came after his meeting with Chinese Premier He Lifeng at the sidelines of the Association of Southeast Asian Nations (ASEAN) summit in Malaysia over the weekend.
Signs of easing global trade tensions diminish the demand for safe-haven assets, such as Silver.
Meanwhile, intensified expectations of more interest rate cuts by the Federal Reserve (Fed) in the near term due to soft US Consumer Price Index (CPI) data for September are expected to offer relief to the Silver price. According to the CME Fedwatch tool, traders see a 94% chance that the Fed could reduce interest rates in each of its two policy meetings remaining this year.
Lower interest rates by the Fed bode well for non-yielding assets, such as Silver.
Silver technical analysis
Silver price retraces from the all-time high of around $54.85 posted last week. The near-term trend of the precious metal has become uncertain as it struggles to return above the 20-day Exponential Moving Average (EMA), which trades around $48.86.
The 14-day Relative Strength Index (RSI) slides below 60.00, suggesting that the bullish momentum has ended for now.
Looking down, the September 23 high of $44.47 would remain a key support. On the upside, the all-time high of $54.50 might act as key barrier.
Silver daily chart
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Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.