Buying silver as trade tensions between US and China persist

On the first day of the week, February 10, the price of silver started its movement from the 31.795 level. This was after the price fell to 31.851 on February 7, with a daily volatility of 2.7%.

According to CFTC data, net speculative positions increased from 44,400 to 50,400, creating further upside potential for the prices.

Earlier, the weakening of the US dollar due to the reduction of trade tensions between the world's biggest economies also had a positive impact on silver prices. Now, improved relations between the United States and China, announced negotiations between the two presidents and a possible elimination of some tariffs reduce the risks of accelerating inflation, make the dollar more attractive and lower demand for the precious metal.

From a fundamental perspective, silver is strongly supported by a structural supply deficit that has been present for several years now and expected to last until at least 2025. High industrial consumption with stable retail demand will offset the decline in the use of the metal in traditional jewelry and silverware.

The use of silver in the green energy industry is the most significant long-term driver of increasing demand. Due to the metal's high electrical conductivity and ability to enhance the capture of sunlight, it is a key component of solar panels. Experts forecast that silver consumption in this industry will expand from the current 100–120 million to 150–160 million troy ounces in the next 5–10 years. The main consumers will be countries actively developing renewable energy, such as the US, the EU members, China and India.

The nearest important event will be the publication of Consumer Price Index data in the States on February 12. Inflation is expected to drop in January compared to December 2024. If the forecast is confirmed, the dollar will be a more attractive asset, while silver prices will decline.

Technical analysis shows the persistence of the uptrend in the dynamics of silver prices. The MACD indicator confirms a strong buying impulse, pointing to the bulls' dominance in the market. The RSI oscillator, despite a temporary correction after reaching the overbought zone on February 7, remains steadily above the 50 level, confirming the bullish nature of the trend. At the same time, the RSI approaching the 80 level may signal a probable consolidation of the prices due to increased volatility. This creates preconditions for a temporary slowdown in growth. The news background indicator also signals buying, which confirms the overall positive dynamics in the silver market.

Current recommendation:

If the current situation persists and the duties promised by China are imposed, buying at the current price is recommended. In such a case, Take profit — 32.700. Stop loss — 31.353.