Precious metals have emerged as the primary outperformers since the US tariffs were introduced. Gold, platinum, and palladium have surged significantly. However, silver appears to be the most promising commodity in 2025. The influx of bullion into the US is pushing XAG/USD quotes to new records. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- US tariffs have driven XAG/USD to record highs.
- A shortage of silver in China is fueling the rally.
- The Fed is supporting silver quotes.
- Silver can be bought as long as the price remains above $58 per ounce.
Weekly Fundamental Forecast for Silver
When Donald Trump announced his tariffs, he claimed that the market would flourish and the economy would enjoy a boom. Experts, on the contrary, warned of a recession. As it turned out, the US president and the experts were both wrong. Wall Street analysts estimate the chances of a recession in 2026 at less than 25%, and the boom did indeed happen. However, the boom occurred in the precious metals markets. Gold gained 65%, palladium soared by 74%, and platinum surged by nearly 50%. However, all of them are lagging behind silver.
Initially, rumors and the inclusion of silver in the list of metals critical to the US economy triggered an influx of bullion from the East to the West. Silver stocks in London melted rapidly, reaching record highs in New York in October. China was affected the most, with the index falling to a 10-year low, and futures trading at record premiums relative to the spot market.
Premiums on China’s Futures and Spot Markets
Source: Bloomberg.
If Donald Trump wanted to punish Beijing with tariffs, he did so thanks to the XAG/USD. The problem of silver scarcity was exacerbated by the festive season in India, which sharply drove up demand and prices. Notably, the precious metal has been in deficit for the past five years. The largest producers, Mexico, Peru, and China, have faced serious barriers in the form of regulatory and environmental restrictions.
The silver market is small, so price sensitivity to ongoing market conditions is higher. The metal reserves in London are estimated at $50 billion, while gold reserves are estimated at $1.2 trillion. The latter market is supported by $700 billion in central bank reserves held by the Bank of England. There is no such safety net for silver. The transfer of bullion from Europe and Asia to the US, coupled with an increase in ETF holdings, allowed the XAG/USD to emerge from the shadow of the XAU/USD.
Silver ETFs Holdings
Source: Bloomberg.
At the same time, silver has other advantages – debasement trading, when currencies and bonds are being sold, and expectations of monetary stimulus from the Fed. In this regard, the central bank’s intention to increase its balance sheet by half a trillion dollars is definitely a bullish factor for the precious metals market.
How high can XAG/USD quotes climb? Everything will depend on US tariffs. In a market with supply constraints, the influx of bullion into the United States is a significant factor driving the ongoing rally in silver prices.
Weekly Trading Plan for XAGUSD
As long as silver trades above $58 per ounce, market sentiment will likely remain bullish. Long positions formed at $53.53 per ounce should be maintained and increased from time to time. This is especially true if the Supreme Court cancels Donald Trump’s universal tariffs. The US administration will have no choice but to impose import duties on specific goods, and the XAG/USD is likely to be the first target.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAGUSD in real time mode
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