Saad Ullah
Silver (XAG/USD) recovered from an early two-week low of $31.66 and returned to near $32.50 during Thursday's North American trading session, even as the US Dollar continues its two-day recovery.
Silver (XAG) Defies Dollar Pressure to Rebound
Silver prices (XAG/USD) demonstrated remarkable resilience on Thursday, reclaiming ground despite the US Dollar Index (DXY) pushing above the 100.00 mark. Typically, a stronger US Dollar makes silver more expensive for investors holding other currencies, yet the white metal managed to recover most of its early losses.
The price movement came after silver touched a fresh two-week low around $31.66 earlier in the session. By North American trading hours, XAG had staged a significant recovery, climbing back to approximately $32.50.
Manufacturing Data Influences Silver (XAG) Trading
The United States ISM Manufacturing PMI data for April revealed that manufacturing activities declined at a faster pace than the previous month. The Manufacturing PMI fell to 48.7 from March's 49.0, though this was better than market expectations of 48.0. Any reading below 50 indicates contraction in the manufacturing sector.
Meanwhile, the ISM Manufacturing Prices Paid index, which measures changes in input costs, expanded at a faster pace to 69.8 from 69.4, albeit missing analysts' estimates of 70.3. The accelerating input costs could potentially feed into consumer inflation, which might limit the Federal Reserve's ability to reduce interest rates.
This scenario typically creates headwinds for non-yielding assets like silver (XAG), as higher interest rates increase the opportunity cost of holding precious metals that don't provide interest or dividends.
Trade Relations Impact Silver (XAG) Price Movement
Earlier in Thursday's session, silver prices dropped sharply as investors reacted to news that US trade tensions might be easing. Markets responded to expectations that fears of additional tariffs announced by US President Donald Trump may have peaked, with Washington reportedly close to announcing bilateral trade agreements with several trading partners.
"Initial trade deals are to be announced in weeks, not months," US Trade Representative Jamieson Greer stated on Fox News, as reported by Reuters.
However, analysts note that ongoing trade uncertainty between the United States and China will likely provide some support for silver prices, limiting potential downside moves. Precious metals like silver (XAG) often serve as safe-haven assets during periods of geopolitical uncertainty.
Silver (XAG) Technical Analysis Shows Mixed Signals
From a technical perspective, silver (XAG) prices are struggling to revisit the over three-week high around $33.70 reached recently. The near-term outlook for the white metal has become uncertain as it trades below the 20-day Exponential Moving Average (EMA), which sits around $32.65.
Technical indicators reveal that market sentiment may be shifting. The 14-day Relative Strength Index (RSI) has fallen below the 50.00 level after failing to break above 60.00, suggesting that investors' bullish sentiment toward silver has diminished.
This technical positioning, combined with macroeconomic factors including dollar strength and inflation concerns, presents a complex picture for silver traders in the coming sessions.
As silver (XAG) continues to navigate these challenging market conditions, traders will be closely monitoring upcoming economic data releases and geopolitical developments for further directional cues. The precious metal remains sensitive to shifts in monetary policy expectations and global trade relations, factors that will likely continue to drive price action in the near term.
Saad Ullah
