Silver (XAG) Forecast: Safe-Haven Demand Wavers After Trump Softens Tariff Threat

Silver Stalls on Memorial Day Volume Lull, Trump Tariff Delay Dampens Appeal

Silver saw little movement on Monday, as U.S. markets were largely inactive for the Memorial Day holiday. Spot silver hovered near last week’s close, consolidating after a strong run that had lifted the metal to $33.48, up 3.67% last week. Traders took a breather following a rally fueled by U.S. dollar weakness, deteriorating fiscal conditions, and rising safe-haven demand.

At 13:15 GMT, XAG/USD is trading $33.35, down $0.13 or -0.39%.

Trump’s Tariff Extension Pulls Pressure Off Metals

One key driver behind Monday’s muted action was a shift in trade policy expectations. Former President Donald Trump delayed his proposed 50% tariff on EU goods until July 9, dialing back immediate geopolitical risk. While last week’s rhetoric around aggressive tariffs spurred safe-haven flows into gold and silver, the delay reduced urgency in those bids. Trump’s original proposal to escalate from an existing 10% rate had rattled markets, but Sunday’s extension—confirmed after talks with European Commission President Ursula von der Leyen—eased short-term fears.

Fiscal Strain and Dollar Weakness Remain in Focus

Despite the calm start to the week, underlying fundamentals for silver remain strong. Last week’s rally was underpinned by intensifying concerns over U.S. fiscal policy, as the latest tax-and-spending bill is projected to expand the federal deficit by $4 trillion. This, coupled with Moody’s downgrade of U.S. sovereign credit, has amplified safe-haven demand across the board.

The U.S. dollar index saw its steepest weekly loss since April, down 1.35%, as international sentiment turned bearish. Net short positions on the dollar swelled to $17.3 billion. Meanwhile, long-dated Treasury yields climbed sharply, with the 30-year hitting 5.14%, signaling mounting investor concern about inflation and the potential need for Federal Reserve intervention.

Silver Tracks Gold’s Strength as Inflation Hedge

Gold’s surge of nearly 5% last week to $3,358.13 offered tailwind support for silver. With inflation hedging back in focus, silver is increasingly benefiting from its role as both an industrial and monetary metal. Although silver typically lags gold in crisis trades, the breadth of concern—spanning trade policy, dollar risk, and debt sustainability—is broadening the appeal of precious metals.

Outlook: Bullish Bias Intact Unless Dollar Reverses

Silver remains well-supported above its 52-week moving average at $31.04 and its 50-week moving average at $32.80. Technical targets remain active at $34.59, $34.87, and $35.40. Unless there is a marked reversal in U.S. fiscal tone or a sustained dollar rebound, traders should expect continued safe-haven inflows. All eyes remain on upcoming Fed commentary and bond market behavior to gauge the next directional move.

More Information in our Economic Calendar.