The Silver price (XAG/USD) is currently trading in a tight range around the $38.00 level, showing a noticeable consolidation pattern during the Asian trading session on Wednesday.
This sideways price action underscores a cautious market mood, as investors await critical updates from the ongoing trade negotiations between the United States (US) and the European Union (EU). Fletrade’s brokers clarify the key points of this topic with precision and depth in their article.
US-EU Trade Talks in Focus
The spotlight remains on EU trade chief Maroš Šefčovič, who is visiting Washington for a fresh round of trade talks aimed at easing mounting transatlantic trade tensions. These talks come at a crucial time when the US President has hinted at the possibility of achieving a trade deal with the EU soon.
The EU is a major trading partner for the US, and progress, or setbacks, in the bilateral trade dialogue could have ripple effects across global financial markets, especially on precious metals like silver, which tend to be sensitive to geopolitical and economic uncertainty.
Inflation Concerns Drive Safe-Haven Appeal
Adding to the bullish case for silver is the growing concern over US inflationary pressures, which could intensify following the implementation of new tariffs scheduled to take effect from August 1. The tariffs, introduced by the US administration as part of its broader trade policy, are widely expected to raise import costs, further pushing consumer prices higher.
Federal Reserve (Fed) officials echoed these concerns on Wednesday. New York Fed President John Williams and Atlanta Fed President Raphael Bostic both signaled that the inflation impact of tariffs is only beginning to manifest.
Since silver historically outperforms in inflationary environments, many investors are considering the precious metal as a hedge against monetary debasement and rising consumer prices. This inflationary outlook, combined with macroeconomic uncertainty, lends continued fundamental support to XAG/USD.
Silver Technical Outlook: Bullish Signals Persist
From a technical analysis standpoint, the Silver price is holding firm above a critical breakout point. The metal recently confirmed a breakout from a Symmetrical Triangle formation on the daily chart, a bullish continuation pattern that led XAG/USD to mark a multi-year high at $39.13, the highest level in over a decade.
Key Indicators to Watch:
- The 20-day Exponential Moving Average (EMA) currently sits near $37.00, acting as a dynamic support level, and its upward slope indicates a firm near-term uptrend.
- The 14-day Relative Strength Index (RSI) continues to trade within the 60.00 to 80.00 range, a zone that signifies strong bullish momentum without yet reaching extreme overbought conditions.
The technical posture suggests that bulls are still in control, although momentum has slowed due to a lack of immediate catalysts. A successful break above $39.13 could set the stage for a test of the psychological resistance at $40.00, a key round-level that could trigger profit-taking or further breakout buying, depending on market sentiment.
On the downside, any short-term weakness may find support near the 20-day EMA around $37.00. A deeper correction could then target the ascending trendline support from the triangle breakout, potentially near $35.80–$36.00.
Market Sentiment and Broader Influences
Despite the bullish technicals, market sentiment remains cautious, driven by uncertainty surrounding global trade policy, the Fed’s interest rate outlook, and the trajectory of US inflation. Silver’s role as both a safe-haven asset and an industrial metal puts it in a unique position, where it reacts to risk-off flows, but also gains or loses based on economic growth forecasts.
Furthermore, global demand dynamics, particularly from sectors like solar energy, electronics, and electric vehicles, continue to influence physical silver demand, contributing to underlying long-term bullishness. However, in the short term, headlines surrounding tariffs, inflation, and Fed policy decisions will likely dictate price moves.
Conclusion: Patience Amid Consolidation
In summary, Silver prices are consolidating near $38.00, absorbing recent gains and awaiting clarity from US-EU trade negotiations. The convergence of technical bullishness, inflation-driven fundamentals, and geopolitical uncertainty offers a fertile ground for further upside potential, but investors are understandably hesitant ahead of key developments.
Should positive news emerge from the Šefčovič–Washington trade talks, silver may catch a bid and resume its uptrend toward $40.00. Conversely, hawkish rhetoric from the Fed or disappointing trade outcomes could lead to a short-term pullback.
As always, volatility in precious metals can accelerate quickly in response to macro events, and risk management remains essential when navigating the silver market.
