Silver (XAGUSD) continues to demonstrate the decline that began on February 21st. During this period, prices have dropped by 4%, from 32.527 to 31.098, having completely lost their yearly gain. On Monday, March 3rd, trading opened at 31.220.
The main pressure on the precious metal has come from US foreign policy, which has strengthened the dollar and provoked profit-taking in the silver market. On Tuesday, March 4th, trade restrictions on imports from Canada and Mexico go into effect, affecting about $1.5 trillion of annual sales. Despite the possibility of a delay, the market has already begun to adjust to these new conditions. Further complicating the situation, both countries have vowed to retaliate if tariffs are imposed.
Despite the fact that Donald Trump's threats to impose tariffs temporarily strengthened the dollar last week, more and more investors are starting to bet against the US currency. This is due to signs of a slowing US economy and fears that trade conflicts could further weaken its growth and lead to stagflation. Friday's personal consumption expenditures (PCE) data showed a 0.3% increase in the core price index, in line with analysts' forecasts. The data reinforced expectations for a Fed rate cut, which also hurt the dollar's appeal. The market is pricing in at least two Fed rate cuts and a total decline of around 55 basis points in 2025.
Such economic worries traditionally push precious metal prices higher. While silver tends to react more slowly than gold, it is likely to follow the latter, which began to recover late last week.
Silver is being supported by the now traditional supply shortage in the market and its demand in the technology sector.
The technical analysis shows a mixed picture. The MACD line is falling, signaling that the upward momentum is weakening and a bearish trend is forming. The RSI is also dropping, but remains within neutral territory, showing no obvious overbought or oversold conditions. The Chaikin Oscillator, which had been falling, indicating the dominance of the sellers, has been slowing down in recent days, suggesting a possible reversal and resumption of the bullish trend.
Current recommendation:
Buy at the current price. Take profit - 32.500. Stop loss - 30.00.
This content is for informational purposes only and is not intended to be investing advice.
