Despite confirmation of a new framework aimed at reviving trade cooperation between the U.S. and China, markets remain hesitant. Investors await formal political approval rather than relying solely on diplomatic agreements. U.S. Commerce Secretary Howard Lutnick stated that the proposal will be presented to President Trump, while China’s delegation must still secure approval from President Xi Jinping. Until these political endorsements occur, traders regard the deal as speculative, which keeps risk sentiment subdued.
Even the announcement that China will lift rare earth export restrictions has failed to significantly lift market sentiment.
Safe-Haven Demand Boosts Precious Metals
This cautious environment is driving increased safe-haven demand for precious metals like gold and silver. Matt Simpson, senior analyst at City Index, explained, “We know there’s a framework, but until Trump or Xi officially signs off, markets will stay nervous—and that’s lifting gold.”
Historically, geopolitical uncertainty has supported precious metals, and this backdrop is reinforcing silver’s gains, which are closely tracking gold’s rise amid ongoing global tensions.
Inflation and Fed Outlook Add to Bullish Momentum
Investor attention now turns to the upcoming U.S. Consumer Price Index (CPI) report scheduled for release at 12:30 GMT, which could heavily influence Federal Reserve policy decisions. With inflation remaining stubbornly high and tariffs being reinstated, expectations for near-term rate cuts are diminishing.
Further weighing on growth prospects, the World Bank recently downgraded its 2025 global economic forecast to 2.3%, citing persistent trade frictions and policy uncertainty. This mix of slowing growth alongside sustained inflation—stagflation—has traditionally increased investor appetite for commodities, especially gold and silver.
Technical Outlook: Silver Eyes Key Resistance at $36.88
Technically, silver (XAG/USD) is trading within an ascending channel and consolidating just below the key resistance level of $36.88. The upward trend remains intact, supported by the 50-day exponential moving average (EMA) at $36.07 and a series of higher lows.
Since breaking above $35.85, silver has maintained strength with minor pullbacks accompanied by bullish candlesticks. The current price action forms a bullish flag pattern, often signaling an impending breakout. The MACD indicator lines are converging, hinting at a potential bullish crossover if momentum picks up.
However, some bearish divergence is present, indicating that momentum has slowed despite steady price action. Traders should look for a bullish engulfing candle above $36.88 as confirmation of continued upside movement.
Trade Setup Summary
- Entry: Break above $36.88 or bounce from $36.07 support
- Stop-Loss: Below $35.85
- Targets: $37.30 (near-term), $37.71 (extended)
- Risk Level: Moderate, pending MACD and candlestick confirmation
Conclusion
Silver remains well-positioned within a bullish technical setup, supported by geopolitical uncertainty and inflation concerns. With key inflation data and Federal Reserve signals imminent, silver bulls are closely monitoring for a breakout that could push prices toward multi-month highs.
