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Silver price dips to around $32.50 as the US Dollar gains support from progress in US-Japan trade talks.
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Fed Chair Powell signals that interest rates will remain unchanged until the central bank gains more clarity.
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Ongoing US-China tariff tensions are expected to cap further downside for Silver prices.
Silver price (XAG/USD) sharply declines to around $32.50 during Thursday's European session after failing to extend its 10-day rally above the critical $33.00 resistance. The correction comes as the US Dollar (USD) shows signs of strength near its recent lows. The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, picks up some bids around its three-year low of 99.00.
The slight rebound in the USD Index is attributed to progress in US-Japan trade negotiations, which have alleviated some uncertainty regarding the US economic outlook. On Wednesday, US President Donald Trump tweeted, “A Great Honour to have just met with the Japanese Delegation on Trade. Big Progress!” signaling a shift toward favorable bilateral trade agreements rather than imposing heavy tariffs.
This development points to a preference for trade deals over tariff impositions, which is generally seen as positive for the US Dollar. If such negotiations with other trade partners continue to yield positive results, it could further reduce global economic uncertainty and lower demand for safe-haven assets like Silver.
Additionally, hawkish comments from Federal Reserve (Fed) Chair Jerome Powell have contributed to the pullback in Silver prices. Powell indicated that the Fed would maintain its current policy stance until there is greater clarity on the economic outlook, which is seen as unfavorable for non-yielding assets like Silver.
Despite this, the ongoing US-China trade tensions help cap the downside for Silver prices. While China has expressed willingness to engage in trade talks with the US, both sides are still grappling with the complexity of the situation.
Silver Technical Analysis
Silver remains above the 20-day Exponential Moving Average (EMA) at $32.28, suggesting that the near-term outlook remains bullish. The metal is eyeing a potential move towards the October 22 high of $34.87.
The 14-day Relative Strength Index (RSI) has made a strong recovery from oversold conditions, bouncing back after dipping below 30.00. The RSI is expected to encounter resistance around the 60.00 level.
If Silver manages to break above the April 16 high of $33.12, it could pave the way for a test of the October 22 high at $34.87, followed by a move towards an over-decade high of $35.50.
On the downside, a decline below the April 14 low of $31.74 would expose the price to further weakness, with the next support levels at $30.90 (April 11 low) and the psychological $30.00 level.
Silver daily chart
