Silver Price Forecast: XAG/USD trades lower as US deals eases tariff uncertainty, NFP eyed
LONDON (August 1) Silver price is down 0.5% to near $36.50 during the European trading session on Friday. The white metal faces selling pressure as the confirmation of tariff deals by the United States (US) with a number of its key trading partners, such as Japan, the European Union (EU), South Korea and others and increasing investors’ confidence that Washington will reach an agreement with China have diminished demand for safe-haven assets, such as Silver.
Safe-haven assets performed strongly since the announcement of the tariff policy by US President Donald Trump, which aimed to reduce wide fiscal deficit of the nation. The demand for these assets increased as investors became worried that the protectionist policy could lead to a damaging global trade war.
Theoretically, heightened global economic tensions improve demand for safe-haven assets.
Meanwhile, a strong rally by the US Dollar (USD) has also weighed on the Silver price. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near a fresh two-month high around 100.00.
Technically, higher US Dollar makes the Silver price an expensive bet for investors.
The US Dollar has strengthened as traders pare bets supporting interest rate cuts by the Federal Reserve (Fed) in the September meeting due to upbeat Q2 Gross Domestic Product (GDP), hot Personal Consumption Expenditure inflation (PCE) report for June, and signals from Chairman Jerome Powell that there is no rush for interest rate cuts.
Higher interest rates by the Fed bode poorly for non-yielding assets, such as Silver.
In Friday’s session, investors will focus on the US Nonfarm Payrolls (NFP) data for July, which will be published at 12:30 GMT.
Silver technical analysis
Silver price trades lower around $36.20, the lowest level seen in almost two weeks. The near-term trend of the white metal is bearish as it trades below the 20-day Exponential Moving Average (EMA) around $37.60.
The 14-day Relative Strength Index (RSI) slides to near 40.00. A fresh bearish momentum would emerge if the RSI breaks below that level.
Looking down, the June 24 low of $35.28 will act as key support for the major. On the upside, the June 30 high near $38.25 will be a critical hurdle for the pair.
FXStreet
