XAG/USD has risen for three straight sessions, hitting a 14-year high of $39.13 before dropping to around $38.60. Increased demand for silver, driven by geopolitical concerns and fears of a trade war, is boosting the metal’s performance. Attention is now on the upcoming US CPI data, which may change expectations for Federal Reserve interest rates and affect silver prices. Tariff threats from the US President towards the EU and Mexico have heightened trade war fears, increasing interest in precious metals.

Silver’s Strong Momentum

Silver is currently supported in a rising channel, showing solid upward momentum. The metal has broken past a key resistance zone above $37, indicating renewed interest from buyers, with $40 now in sight. Technical indicators reveal that Silver’s RSI is in overbought territory at 73.15, while the ADX at 15.65 suggests a strengthening trend. If prices hold above $38.50, further gains may be possible, with support near $37.30. Silver’s price is influenced by geopolitical instability, interest rate shifts, and the behavior of the USD. Industrial demand, especially from the US and China, plays a role in silver’s pricing, and the metal typically tracks gold’s price movements. The Gold/Silver ratio can provide insights into their relative valuations. Silver’s recent rise—peaking at $39.13, a level not seen since 2010—reflects growing geopolitical tensions and the ongoing threat of new trade restrictions. The drop to $38.60 has not impacted the overall trend, which remains solidly supported in a rising channel, signaling more potential advances. This situation has attracted more investor attention due to changing global conditions.

Expectations for US Consumer Inflation Data

With US consumer inflation data arriving soon, interest rate market sentiment is likely to adjust. A surprising inflation figure could impact the Federal Reserve’s view, which would affect the dollar’s value. Since silver often moves inversely to the dollar, the CPI data’s impact could either support or undermine its recent gains. A weaker dollar, particularly if coupled with lower long-term yields, could boost silver prices. Mid-channel support now appears to be just above $37.30. If prices remain above this level, they may sustain short-term buying momentum. The significant surge past previous resistance at $37 signals renewed confidence, especially as market participants reassess the growing gap between industrial demand and interest in hedging against inflation. However, technical indicators suggest some caution. The RSI above 73 increases the risk of a short-term pullback, especially alongside an ADX of just over 15. These numbers don’t indicate exhaustion but suggest the early formation of a directional trend that typically allows for further movement — though it may face short-term pauses. Market focus has shifted back to safe-haven assets. Discussions about trade tariffs from Washington—especially if they become more aggressive or specific—are driving demand for metals that serve both as financial hedges and industrial materials. It’s also important to watch the Gold/Silver ratio. This ratio has been slightly narrowing, indicating that silver is outperforming gold relatively. Changes in this ratio can often predict where speculative and institutional investments may head next. A drop below the long-term average could encourage further strength in both metals, especially during times of real rate volatility. We recommend staying long, possibly through options or synthetic strategies, to account for the high RSI while also positioning for a potential break towards $40. Short-term pullbacks may provide better buying opportunities, especially if the $37.30 area holds. With industrial activity—particularly in Chinese electronics and the American automotive sectors—showing modest improvement, this demand offers additional support in a risk-sensitive market. Create your live VT Markets account and start trading now.

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