Saad Ullah
Silver (XAG) pulls back from a three-week high as investors anticipate de-escalation in trade tensions between the United States and China, with US President Trump expressing confidence in reaching a deal with Beijing.
Silver (XAG) Retreats from Three-Week High Amid Trade Optimism
Silver price (XAG/USD) has retreated to around $33.30 during North American trading hours on Thursday, backing off from an almost three-week high of $33.70 recorded earlier in the session. The white metal's correction comes as investors grow increasingly optimistic about a potential significant de-escalation in the trade conflict between the United States and China.
Market sentiment regarding trade relations between the world's two largest economies improved substantially after US President Donald Trump provided reassurance about ongoing negotiations with Beijing. "Discussions with Beijing are going well, and I think that we will reach a deal," Trump stated on Tuesday, boosting hopes for trade normalization.
Further supporting this optimistic outlook, US Treasury Secretary Scott Bessent indicated that both nations might be willing to reduce recently imposed additional tariffs. "I don't think either side believes that the current tariff levels are sustainable, so I would not be surprised if they went down in a mutual way," Bessent remarked on Wednesday.
Silver (XAG) Faces Mixed Signals from US-China Trade Developments
Adding to the positive developments, a report from the Wall Street Journal (WSJ) published on Wednesday suggested that the White House might be considering lowering additional import duties by approximately 50%-65%. This potential reduction would represent a significant step toward easing trade tensions that have impacted global markets.
Meanwhile, China has established its position in the negotiations, issuing what amounts to an ultimatum to the United States. According to a spokesperson from China's commerce ministry, as reported by the Financial Times (FT), Beijing expects the US to "completely cancel all unilateral tariff measures" as a precondition for meaningful trade talks.
These constructive comments from Washington regarding the resolution of trade disputes have helped alleviate concerns about global economic turmoil. From a theoretical perspective, this scenario typically reduces the safe-haven appeal of silver. However, it's worth noting that improving relations between these economic powerhouses could simultaneously increase demand for silver as an industrial metal.
Silver (XAG) Industrial Demand Remains Strong Despite Price Fluctuations
Silver has widespread applications across various industries, making its demand profile more complex than purely monetary metals. The white metal is extensively used in Electric Vehicles (EV) manufacturing, electronic appliances, power transmission and cables, as well as mining operations. This industrial utility contributes significantly to silver's overall demand structure and price dynamics.
The improving trade outlook between the US and China could potentially boost industrial activity, which would likely increase demand for silver in manufacturing processes. This industrial demand factor provides a counterbalance to any reduction in safe-haven buying that might result from decreasing global economic uncertainties.
Silver (XAG) Technical Analysis Points to Key Support and Resistance Levels
From a technical analysis perspective, the silver price is currently testing the breakout region of the consolidation pattern around $33.10 that formed on the daily timeframe. The 20-day Exponential Moving Average (EMA) near $32.55 continues to provide crucial support for silver prices, helping to limit downside movements.
The 14-day Relative Strength Index (RSI) is approaching the 60.00 level, suggesting moderate bullish momentum. Analysts note that a fresh bullish impulse could emerge if the RSI breaks above the 60.00 threshold, potentially signaling more sustained upward movement.
Looking at key price levels, the March 28 high of $34.60 represents significant resistance for the metal in its potential upward trajectory. On the downside, the April 11 low of $30.90 stands as a critical support zone that bulls would be keen to defend to maintain the current price structure.
As geopolitical developments continue to unfold and trade negotiations progress, silver traders will be closely monitoring both industrial demand factors and safe-haven flows to gauge the metal's next directional move.
Saad Ullah
