Silver Price Forecast: XAG/USD nosedives below $36 on improvement in Sino-US trade relations

• Silver price faces an intense sell-off due to multiple headwinds.
• Stable truce between Israel and Iran, and improving US-China trade relations weakens demand for safe-haven assets.
• Accelerating Fed dovish bets fail to support the Silver price.

Silver price slides over 2% to near $35.85 during European trading hours on Friday. The white metal faces a sharp selling pressure due to improvement in trade relations between the United States (US) and China and no signs of Israel-Iran truce violation.

During the European trading session, a spokesperson from the Chinese Ministry of Commerce confirmed that Beijing has agreed to expedite exports to rare earths to the US, while Washington will revoke non-tariff barriers.

On Thursday, US Commerce Secretary Howard Lutnick also confirmed that China is going to "deliver rare earths to us" and "we'll [Washington] take down our countermeasures", Bloomberg TV reported.

Another reason behind severe weakness in the Silver price is the stability in ceasefire between the two Middle East nations since the announcement on earlier this week. US President Donald Trump announced a truce between Israel and Iran, and urged them not to violate the same.

The scenario of easing geopolitical tensions and global economic uncertainty diminishes the appeal of safe-haven assets, such as Silver.

Meanwhile, an increase in Federal Reserve (Fed) dovish bets due to tensions between Donald Trump and Chair Jerome Powell regarding the monetary policy stance has failed to offer support to the Silver price. Fed dovish bets escalate as investors expect Trump's preferred Powell's successor will support his economic agenda.

Theoretically, lower interest rates by the Fed bode well for non-yielding assets, such as Silver.

Silver technical analysis

Silver price forms a Head and Shoulder (H&S) chart pattern on a four-timeframe whose breakdown below the neckline results in a bearish reversal. The neckline of the chart pattern is plotted near the Tuesday's low around $35.28.

The white metal holds above the 200-period Exponential Moving Average (EMA), suggesting that the long-term trend is still bullish.

The 14-period Relative Strength Index (RSI) slides to near 40.00. A fresh bearish momentum would emerge if the RSI fails to hold above that level.

Looking down, the March 28 high around $34.60 will act as key support for the Silver price. On the upside, the fresh over-a-decade high around $37.32 will be the key barrier.

Silver daily chart