Silver Price Forecast: XAG/USD advances to near $32.50 as USD Index dives on US economic concerns

• Silver price gains sharply to near $32.50 amid weakness in the US Dollar.
• Escalating US economic concerns have kept the US Dollar on the backfoot.
• Investors await the US CPI data for fresh cues on the interest rate outlook.

Silver price (XAG/USD) jumps sharply to near $32.50 in Tuesday’s European session. The white metal strengthens as the US Dollar (USD) faces a sharp sell-off, with investors turning cautious over the United States (US) economic outlook due to President Donald Trump’s tariff agenda. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 103.35, the lowest level seen in four months. The lower US Dollar makes precious metals, such as Silver, more attractive to investors.

Market participants worry that tariff policies by President Trump would result in an economic slowdown in the US. On Friday, Trump said, "There is a period of transition because what we are doing is very big.” Historically, periods of transition result in economic turbulence in the short term. Signs of heightened economic tensions improve the safe-haven demand for precious metals, such as Silver.

Meanwhile, investors await the US Consumer Price Index (CPI) data for February, which will be released on Wednesday. Investors will pay close attention to the US inflation data as it will influence market speculation for the Federal Reserve’s (Fed) monetary policy outlook. The US CPI data is estimated to have grown at a slower pace. Signs of a slowdown in inflationary pressures would boost market expectations that the Fed will cut interest rates in a May policy meeting. The likelihood for the Fed to cut interest rates in May has increased to 51% from 37% a day ago, according to the CME FedWatch tool. The scenario of lower interest rates bodes well for non-yielding assets, such as Silver.

Silver technical analysis

Silver price strives to revisit the key resistance of $33.40 plotted from the February 14 high. The 20-day Exponential Moving Average (EMA) near $32.07, continues to support the Silver price.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.

Looking down, the upward-sloping trendline from the August 8 low of $26.45 will act as key support for the Silver price around $30.00. While, the October 22 high of $34.87 will be the key barrier.

Silver daily chart