On February 10, 2025, former President Donald Trump announced the imposition of tariffs on steel and aluminum imports, aiming to protect domestic industries from foreign competition. While these tariffs directly target steel and aluminum, they can have indirect effects on other markets, including silver. Industries that rely heavily on steel and aluminum, such as automotive and construction, may face increased production costs due to the tariffs. To mitigate these costs, manufacturers might explore alternative materials. Silver, known for its excellent conductivity and malleability, could be considered as a substitute in certain applications, potentially leading to an uptick in its demand. The silver market is influenced by various factors, including industrial demand, investment trends, and geopolitical events. The introduction of tariffs adds another layer of complexity. If manufacturers shift towards using more silver, its demand could rise, potentially driving up prices. Conversely, if the tariffs lead to a slowdown in industries that consume silver, such as electronics or solar panel manufacturing, demand could decrease, exerting downward pressure on prices. The imposition of tariffs has historically led to tensions among trading partners. For instance, in previous instances when the U.S. imposed tariffs on steel and aluminum, countries like Canada, Mexico, and members of the European Union responded with their own countermeasures. Such trade disputes can disrupt supply chains, affecting the availability and cost of various commodities, including silver. If major silver-producing countries impose retaliatory tariffs or restrictions, it could impact the global supply and pricing of silver.
Silver COMEX has been testing the $32.30 resistance level, which has acted as a strong barrier in recent weeks. Every time the price approaches this level, selling pressure emerges, preventing a breakout. However, with Trump’s tariff announcement on steel and aluminum, silver could gain bullish momentum. If the price closes above $32.30 with strong volume, it would signal a breakout, potentially leading to a rally toward $32.5 and eventually around $34. Additionally, if silver is trading above the 50-day moving averages, it strengthens the bullish case. On the other hand, if silver fails to break $32.30 and faces rejection, a pullback toward $30.6 or lower is possible.
Until then, Happy Trading!
Commodity Samachar Securities
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