Silver prices have retreated to near $32.00, even as U.S. President Trump reaffirmed plans to impose a 25% tariff on Canada and Mexico. This decline comes amidst a backdrop of fluctuating economic indicators and market dynamics. Notably, the Services PMI contracted for the first time after a 25-month expansion streak, adding to the market's apprehensions. Despite these challenges, silver remains a critical industrial metal, especially in electronics and solar energy sectors, due to its superior electrical conductivity.
The recent dip in silver prices has been influenced by several factors, including the U.S. Dollar's rebound. Investors have been absorbing the implications of weaker flash U.S. S&P Global PMI data for February. Additionally, geopolitical instability or fears of a looming recession often elevate silver's appeal as a safe-haven asset. The metal's price outlook remains tied to various technical and fundamental factors.
The upward-sloping trendline originating from the August 8 low of $26.45 serves as a crucial support level for silver, currently around the $30.00 mark. Meanwhile, the October 22 high of $34.87 is expected to act as a significant resistance barrier. The 50-day Exponential Moving Average (EMA), currently sloping higher at approximately $31.40, indicates a potentially bullish trend for silver, despite its recent setback.
Silver prices have also been impacted by the steadiness of the U.S. Dollar, which has seen recovery from an 11-week low. This currency stability has exerted downward pressure on silver prices. However, many investors continue to view silver as a viable option to diversify their portfolios, seeking its intrinsic value or its potential as a hedge against inflation.
The Gold/Silver ratio plays a pivotal role in assessing the relative valuation between these two precious metals. A high ratio may suggest that silver is undervalued or that gold is overvalued, prompting strategic shifts in investor preferences. Recently, silver failed to maintain its upward momentum above the February 14 high of $33.40, leading to a retracement in its price on Thursday.
Technical indicators such as the 14-day Relative Strength Index (RSI) show values between 40.00 and 60.00, implying that the bullish momentum in silver has diminished for now. Historically, silver prices have demonstrated a tendency to follow gold's movements, further underscoring the interconnected nature of these markets.