21 Jan 2025

• Silver price ticks lower as the US Dollar recovers sharply, with Trump keeping the tariff hike plan intact.
• Trump directed federal agencies to scrutinize trade relations with neighbors and China.
• Traders have raised dovish bets for the Fed’s May policy meeting.
• Silver prices (XAG/USD) have experienced a slight decline, approaching $30.50 during the European trading session on Tuesday. The white metal is under pressure as the US Dollar (USD) makes a strong recovery following President Donald Trump's announcement that the proposed tariff increases on foreign nations are postponed, though not entirely dismissed. On his inaugural day in office, Trump indicated that the idea of implementing universal tariff hikes remains a consideration, but stated, "We are not ready for that yet."
• The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, has rebounded significantly from its nearly two-week low of around 108.00 recorded on Monday. Traditionally, a stronger US Dollar exerts downward pressure on precious metals like Silver, as it renders them more expensive for investors.
• The Greenback experienced a significant decline on Tuesday following reports from the Wall Street Journal (WSJ) indicating the absence of tariff increases in a presidential memorandum. Nevertheless, the memorandum revealed that President Trump has instructed federal agencies to examine trade policies and assess trade relations with China and other North American economies.
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• Concurrently, the decrease in Silver prices has been somewhat mitigated by falling bond yields. A reduction in yields on interest-bearing assets diminishes the opportunity cost associated with non-yielding assets like Silver, thereby enhancing their attractiveness. The yield on 10-year US Treasury bonds has dropped to 4.56%. This decline in US Treasury yields has occurred as traders anticipate that the Federal Reserve (Fed) may lower interest rates during the policy meeting scheduled for May.
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• As per the CME FedWatch tool, the likelihood of the Fed implementing a rate cut in May has decreased to 53%, down from 63% a week prior.

• Silver technical analysis

  Silver prices are currently facing challenges near the ascending trendline situated around $30.80, which has been established from the low of $22.30 recorded on 29 February 2024, as observed on a daily chart.

  
  

  The white metal has shown significant buying interest close to the 200-day Exponential Moving Average (EMA) at approximately $29.45; however, it is having difficulty maintaining levels above the 50-day EMA, which stands at around $30.30.

  
  

  The 14-day Relative Strength Index (RSI) is encountering resistance near the 60.00 mark. A new bullish momentum could be initiated if it successfully surpasses this level.