Silver Price Forecast: XAG/USD revisits monthly high near $31 as US Dollar extends downside

• Silver price extends its upside to near $31.00 amid a sell-off in the US Dollar.
• The Greenback faces pressure as Trump has announced lower tariffs on China than expected.
• The Fed is expected to keep interest rates steady in the next three policy meetings.

Silver price (XAG/USD) reclaims a more-than-a-month high of $30.95 in Wednesday's European session. The white metal strengthens as the US Dollar (USD) extends its downside due to less-fearful tariff plans announced by United States (US) President Donald Trump in his first two days of administration.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, refreshes a two-week low at 107.80. The lower US Dollar makes the Silver price inexpensive for investors. 10-year US Treasury yields tick lower to near 4.57%.

Trump has announced 25% tariffs on Mexico and Canada and is discussing 10% tariffs on China from February 1. However, his comments during the election campaign indicated that the tariffs would be much higher than what he actually announced.

Lower tariffs by Trump would also weigh on market speculation that the Federal Reserve (Fed) will keep interest rates at their current levels for longer. Market participants were anticipating that higher tariffs would increase demand for domestically produced goods and services. This scenario would have accelerated inflationary pressures.

Currently, the CME FedWatch tool shows that traders are confident that the Fed will keep its key borrowing rates in the range of 4.25%-4.50% in the coming three policy meetings.

Silver technical analysis

Silver price gathers strength to return above the north-side sloping trendline near $30.85, which is plotted from the 29 February 2024 low of $22.30 on a daily timeframe.

The white metal discovered strong buying interest near the 200-day Exponential Moving Average (EMA), around $29.45, and has now extended its upside above the 20-day EMA, which is around $30.26. This suggests that the overall trend has turned bullish.

The 14-day Relative Strength Index (RSI) rises to near 60.00. A fresh bullish momentum would trigger if it manages to break above 60.00.

Silver daily chart