12 Mar 2025

Silver prices have surged to nearly $33.00 as the US Dollar struggles amid rising concerns regarding a potential economic slowdown in the United States. Investors are keenly anticipating the release of US inflation data for February. Additionally, prospects of a ceasefire between Russia and Ukraine may exert downward pressure on silver prices.

During European trading hours on Wednesday, the price of silver (XAG/USD) approached $33.00, marking the highest level in over two weeks. The precious metal has gained strength as fears surrounding a US economic downturn have placed the US Dollar (USD) under pressure. The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, has seen a slight increase but remains near a four-month low of 103.35.

Market participants are increasingly concerned that the US economy may be heading towards a recession, particularly as President Donald Trump's tariff policies could negatively impact consumer demand in the short term, with expectations that these tariffs may lead to inflation. Concerns about a recession intensified following remarks from US Commerce Secretary Howard Lutnick during a CBS interview on Tuesday, where he suggested that the President's policies are beneficial despite the recessionary risks they may pose. In times of economic uncertainty, the allure of precious metals like silver tends to rise.

The growing risks to the US economy have heightened speculation that the Federal Reserve (Fed) may implement interest rate cuts sooner than previously anticipated. The CME FedWatch tool indicates a 42% probability of a rate cut in May, a significant increase from the 10.4% likelihood reported a month ago. Investors are looking forward to the US Consumer Price Index (CPI) data for February, scheduled for release at 12:30 GMT, for further insights into the Fed's monetary policy direction.

Economists anticipate that the year-on-year headline inflation rate will have increased at a more moderate rate of 2.9%, in contrast to the 3% rise recorded in January. Concurrently, the core Consumer Price Index (CPI), which omits the fluctuating prices of food and energy, is projected to have slowed to 3.2%, down from the previous figure of 3.3%.

On the geopolitical front, the increasing optimism regarding a potential resolution to the conflict in Ukraine has not adversely affected the price of silver. On Tuesday, Ukraine reached an agreement for an immediate 30-day ceasefire during discussions with U.S. officials in Saudi Arabia. Meanwhile, Russia has expressed a desire to consult with U.S. President Trump before making any statements regarding the acceptability of a temporary ceasefire.

Silver Technical Analysis  
The price of silver is currently forming an Ascending Triangle chart pattern on the daily timeframe, reflecting a state of indecision among market participants. The horizontal resistance of this chart pattern is established at the February 14 high of $33.40, while the upward-sloping boundary is drawn from the December 31 low of $28.78.

The 20-day Exponential Moving Average (EMA), situated around $32.20, continues to provide support for the silver price.

The 14-day Relative Strength Index (RSI) has risen above 60.00. A bullish momentum is likely to be triggered if the RSI remains above this threshold.

On the downside, the psychological level of $30.00 is expected to serve as significant support for the silver price, while the major resistance is identified at the October 22 high of $34.87.