Silver Eyes $37.71 as Trade Tensions, Fed Uncertainty Push Bulls Forward
Despite both the U.S. and China confirming a new framework to revive trade cooperation, markets remain hesitant. Investors are watching...
Quick overview
- Despite a new U.S.-China trade cooperation framework, market sentiment remains cautious until political approvals are secured.
- Safe-haven demand for gold and silver has increased due to geopolitical tensions and persistent inflation risks.
- Silver is trading within a bullish trend, with key technical levels indicating potential for further price increases.
- Upcoming inflation data and central bank decisions are critical factors that could influence silver's market trajectory.
Despite both the U.S. and China confirming a new framework to revive trade cooperation, markets remain hesitant. Investors are watching for political approval, not just diplomatic handshakes. U.S. Commerce Secretary Howard Lutnick said the proposal would head to President Trump, while China’s delegation awaits green light from President Xi. Until then, traders see the deal as speculative, keeping risk sentiment cautious.
Even news that China will lift rare earth export restrictions failed to meaningfully improve market mood.
As a result, safe-haven demand for gold and silver has intensified. “We know there’s a framework, but until Trump or Xi officially signs off, markets will stay nervous—and that’s lifting gold,” noted Matt Simpson, senior analyst at City Index.
Precious metals are feeding off geopolitical doubt, a narrative that has historically served them well. That backdrop is reinforcing support for silver, which has mirrored gold’s rise amid global uncertainty.
Inflation, Fed Outlook Fuel Bullish Pressure
Next up is inflation. The U.S. Consumer Price Index (CPI), set for release at 12:30 GMT, could shape the Federal Reserve’s next move. With inflation remaining sticky and tariffs being reintroduced, rate cuts now seem unlikely in the near term.
Adding to the bearish macro picture, the World Bank trimmed its 2025 global growth forecast to 2.3%, pointing to trade frictions and policy instability. The combination of sluggish growth and elevated inflation—stagflation—has pushed investors toward commodities, particularly gold and silver.
Current market drivers supporting silver:
- Safe-haven demand from geopolitical tension
- Persistent inflation risks tied to tariffs
- Delay in Fed interest rate cuts fueling dovish bets
Technical Setup: Silver Targets $37.71
Technically, silver (XAG/USD) continues to trade within a well-defined ascending channel, consolidating just below a key resistance level at $36.88. The trend remains firmly bullish, supported by the 50-EMA at $36.07 and a strong series of higher lows.
Since its breakout above $35.85, silver has shown strength with shallow pullbacks and bullish candles. Current price action resembles a bullish flag pattern, which typically precedes another breakout. The MACD lines are converging and could soon form a bullish crossover if momentum revives.
Still, there’s slight bearish divergence, as momentum is lagging despite stable price action. Traders should watch for a bullish engulfing candle above $36.88 to confirm upside continuation.
Trade Setup Summary:
- Entry: Break above $36.88 or bounce from $36.07
- Stop-loss: Below $35.85
- Targets: $37.30 (initial), $37.71 (extended)
- Risk: Moderate; monitor MACD and candlestick confirmation
Conclusion
Silver remains well-positioned within its bullish trend, supported by macroeconomic uncertainty and strong technicals. With inflation data and central bank clues around the corner, silver bulls are watching for that breakout moment to retest multi-month highs.
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