- Silver prices show caution around $38.00 following the confirmation of the US-EU trade agreement.
- Washington imposes a 15% tariff on imports from Brussels.
- The Federal Reserve is expected to maintain interest rates steady on Wednesday.
Silver (XAG/USD) is expected to be traded cautiously near the significant support level of $38.00 during Asian trading hours on Monday. The white metal may experience some pressure, as the recent trade agreement between the US and the European Union seems to have diminished the appeal of safe-haven assets.
This US-EU agreement has encouraged a more risk-friendly attitude among investors. The S&P 500 futures showed notable gains in Asian trading, signaling a solid market interest in riskier investments.
Over the weekend, President Trump announced the finalized trade deal between Washington and Brussels, which includes a 15% tariff. This is notably lower than the higher rate he had mentioned earlier this month.
Looking ahead, the Federal Reserve’s monetary policy decision on Wednesday will likely be the next significant factor influencing silver prices, with expectations of holding interest rates steady between 4.25% and 4.50%. The Fed has kept its borrowing rate stable since the year’s beginning.
For non-yielding assets like silver, elevated interest rates aren’t particularly encouraging.
Silver Technical Analysis
Silver prices are being adjusted from last week’s peak of $39.53 down to around $38.00. The 20-day exponential moving average is projected to serve as a critical support point for silver, hovering near $37.85.
The 14-day relative strength index (RSI) is currently below 60.00, pointing towards a decrease in bullish momentum.
On the downside, June 18th saw the highest price at $37.32, while the high recorded on June 23rd reached nearly $39.53, representing a considerable barrier for the metal.
Silver Daily Chart
(This update was modified as of July 28th at 08:49 GMT, indicating a 20-day EMA of $37.85 instead of $86.25.)
Silver FAQ
Silver is a highly traded metal among investors. Though it’s not as popular as gold, many turn to silver to diversify their portfolios, especially during inflationary periods. Investors can acquire physical silver, like coins or bars, or use trading funds that track prices globally.
Silver prices can fluctuate due to various factors. Concerns over geopolitical instability or recessions can make silver a safer choice compared to gold, albeit to a lesser degree. Being a non-yielding asset, silver usually rises when interest rates are low. Its value is also tied to the US dollar; a stronger dollar tends to keep silver prices down, while a weaker dollar can lead to price increases. Other influencing factors include mining supply and investment demand, as silver is more abundant than gold and its recycling rates can similarly impact prices.
Silver is extensively used across various industries, particularly in electronics and solar energy, largely due to its high electrical conductivity. Demand surges can drive prices up, while declines may push them down. Economic shifts in key markets like the US, China, and India can significantly impact silver prices. For instance, China’s vast industrial sector incorporates silver into numerous processes, and in India, the desire for precious metals in jewelry also influences price settings.
Silver prices typically trend alongside gold. When gold prices rise, silver often follows suit, as it shares a similar safe asset status. The gold/silver ratio illustrates how many ounces of silver equals the value of one ounce of gold, helping investors gauge the relative valuations of the two metals. Investors might consider high ratios indicating silver is undervalued or gold overvalued, while low ratios could suggest the opposite.
