Silver Price Forecast: XAG/USD rallies to near $33 on Trump's fresh tariff threats

• Silver price jumps to near $33.00 as Trump has threatened to announce tariffs on pharmaceutical imports.
• China has stated that trade talks would begin only after the US reduces additional tariffs, which currently stand at 145%.
• The Fed is expected to leave interest rates steady on Wednesday.

Silver price (XAG/USD) surges to near $33.00 during European trading hours on Tuesday. The white metal strengthens as demand for safe-haven assets increasez after United States (US) President Donald Trump threatened to impose tariffs on pharmaceuticals.

On Monday, US President Trump signaled that he intends to reduce reliance on pharmaceutical imports and will announce tariffs on them in two weeks. Trump signed orders to reduce the time lag for approval of new pharma plants and instructed the Environmental Protection Agency (EPA) to accelerate the construction of new manufacturing facilities. 

Meanwhile, persistent uncertainty over US-China trade talks continues to support the demand for safe-haven assets, such as Silver. Both nations are trading at a very high level of tariffs, dampening the operating margins of businesses. The US has imposed 145% tariffs on imports from China, while the latter is taking 125% import duty. Washington has signaled that these levels of tariffs are not sustainable, but it wants Beijing to initiate trade talks before lowering import duties. However, Beijing has clarified that it will come to the table for trade negotiations only after the US trims additional levies.

Additionally, the US Dollar's underperformance ahead of the Federal Reserve's (Fed) monetary policy decision on Wednesday has also supported the Silver price. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades lower around 99.60. Technically, a lower US Dollar makes the Silver price an attractive bet for investors.

According to the CME FedWatch tool, traders have fully priced in that the Fed will leave interest rates steady in the range of 4.25%-4.50% for the third straight meeting in a row.

The scenario of the Fed maintaining interest rates bodes poorly for non-yielding assets, such as Silver.